Terrey Hills NSW Property Investment

## 1. Investment Verdict We recommend a "Buy" for Terrey Hills, NSW, with the single most important number justifying this decision being the 6.2% 5-year Compound Annual Growth Rate (CAGR), indicating a strong long-term growth trend.

## 2. Market Overview The median house price in Terrey Hills is approximately $2,607,458, pending peer validation, while the median unit price is $1,421,427. The market has experienced a -5.8% price growth over the past year, but the 6.2% 5-year CAGR suggests a positive long-term outlook. With an owner-occupier rate of 84%, the market is dominated by owner-occupiers, which can contribute to stability. However, the premium price point may limit the buyer pool and increase interest rate sensitivity. For buyers, this may signal an opportunity to negotiate, while sellers may need to be patient and flexible with their pricing.

## 3. Rental Market The rental market in Terrey Hills is characterized by a low vacancy rate of 1.6%, indicating high demand for rentals. The median weekly rent is $1,300, and the gross rental yield is 2.6%. The rental demand is rated as high, with an unemployment rate of 2.5%, suggesting a strong and stable tenant base. This makes Terrey Hills an attractive option for investors seeking rental income, despite the relatively low yield.

## 4. Short-Term Rental Opportunity Unfortunately, the data does not provide insights into the short-term rental market in Terrey Hills, including nightly rates and occupancy. Therefore, we cannot estimate the potential annual revenue from short-term rentals or compare it to the long-term rental market. Investors should consider the long-term rental market as the primary source of income.

## 5. Infrastructure & Growth Drivers Terrey Hills benefits from several infrastructure projects, including the announced Beaches Link Tunnel, the operational NorthConnex Tunnel, and the under-construction Sydney Metro West. The New Intercity Fleet (NSW Trains) is also under delivery, which may improve transportation links. The closest train station, Mount Kuring-gai, is 8.6km away, providing relatively convenient access to public transportation. These infrastructure developments may drive growth and increase demand for properties in the area.

## 6. Bull Case If market conditions hold or improve, the upside scenario for Terrey Hills could be significant. With a 3-year growth forecast of 2.3%, the median house price could increase to approximately $2,700,000. Considering the 6.2% 5-year CAGR, long-term investors may see substantial capital appreciation. Additionally, the low vacancy rate and high rental demand could lead to rental income growth, making Terrey Hills an attractive option for investors seeking both capital growth and rental income.

## 7. Risks Specific risks associated with investing in Terrey Hills include the premium price point, which limits the buyer pool and increases interest rate sensitivity. The supply pipeline is moderate, with development activity consistent with long-term averages, which may impact demand and prices. The vacancy risk is relatively low, given the 1.6% vacancy rate. However, investors should be aware of the potential risks associated with a single-employer dependency, although the unemployment rate is low at 2.5%. Flood risk and bushfire risk are not on record for this suburb in the NSW LEP/state planning overlay, and investors should order an independent flood certificate and a Bushfire Attack Level (BAL) assessment before committing.

## 8. The Play For investors looking to enter the Terrey Hills market, we recommend targeting properties in the $2,500,000 to $3,000,000 range for houses and $1,200,000 to $1,600,000 for units. A minimum yield of 2.5% should be targeted to ensure reasonable rental income. Investors should watch for signals such as changes in interest rates, infrastructure developments, and shifts in rental demand. The recommended strategy is to hold for the long term, considering the 6.2% 5-year CAGR and the potential for capital growth.

This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.