There has been a lot of buzz around something called the ‘New York’ effect in Sydney and how it’s likely to shape our city over the next few years. But what is this phenomenon and how will it affect you?
The quick answer is that it’s when property prices become so extreme in a capital city, compared to other parts of the country, that it prices out the locals. This has been said to be true in Manhattan, where renters make up a large proportion of those living in the city, and the same might start to be said of Sydney. While those who are on professional incomes, usually in couples, are likely to still be able to afford most of Sydney’s properties, those who are on mid- to low-incomes, usually ‘essential’ workers, will be unable to buy.
Now we’re through a drawn-out cycle of booming property prices, we can assess what we’re dealing with. Sydney’s median dwelling price was $852,000 in January, compared to $380,000 across the rest of NSW (both houses and units), according to CoreLogic data. For those who didn’t get on the ladder ahead of the boom, those who bought in later and those who want to upsize, it’s tougher than ever to buy that next home.
As a result, there’s a move to the north shore underway by Sydneysiders who can no longer afford the CBD, inner west, east and inner northern suburbs. Many owners of smaller inner west homes are selling up and moving to the leafy north to upgrade, ensure they can expand their families – or start one – and afford the move. Others will continue to rent.