The challenge, if you are going to buy an investment property in this market, is you need to have an eye for both up-and-coming suburbs and the critical issue of rental yield. Premium suburbs within 10 to 12km of the CBD, those near water and those that have scarcity value are likely to perform well.
To be a successful investor in Sydney it is best to identify areas that have finished the “down swing” phase of the property cycle and are now starting to move forward. Hot spots in property activity offer high capital growth opportunities in the Sydney market as well as southeast Queensland (Brisbane and the Gold Coast) where high levels of migration are evident.
For those thinking of property investment in the Sydney real estate market there are many issues to consider. The gains can be great, but it’s important to make prudent decisions regarding location, type of property, the amount you want to spend and the returns you can expect.
As with any property investment the same key considerations need to be taken into account:
- Location – suburb and proximity to transport and facilities;
- Cost – some areas where price growth has been good in recent years now have a high entry level;
- Previous capital gains experienced by other properties in the area;
- Rental returns currently being achieved in the area;
- Any planned changes to the area that will make it more or less desirable for renters.
Remember property investment is a long term strategy. The idea is to accumulate property in between each property “boom” during your working life without affecting your lifestyle. Property booms will inevitably slow down, but the factors that influence this are simply part of the property cycle. According to recently released market forecasts from BIS Shrapnel; Sydney’s housing market is the one to watch as we approach the New Year.
In fact, BIS predict a 21% increase in the median Sydney house value over the next three years. We believe thing these forecasts are conservative, considering in the September quarter alone median house and unit prices increased by 5.66% and 2.32% respectively. This suggests that Sydney’s property market is set for a comeback after languishing for a number of years. There are now some great opportunities for investors to get back into the Sydney housing market and make decent long-term gains as things pick up over time.
Some buyers have asked me whether they have missed the boat as Sydney seemingly races ahead of the other capital city markets, but this is not the case, as median prices are still playing catch after virtually six years of no capital growth. Of course you still have to be selective about where you buy and I would encourage purchasers to look at areas that have good public transport, established infrastructure and amenities and services that attract tenants and owner occupiers like shopping, restaurants and cafes, schools and recreational venues.
Our research shows that some Sydney suburbs have outperformed the average in the last three years; with a number of areas exhibiting up to 20% growth while many areas had median prices falling.