For some property investors, just
hearing the words ‘Sydney’ and ‘property’ in the same sentence,
can be enough to make them cringe, while others see the market
in Sydney as an avenue of opportunity and growth. Regardless,
before you actually launch into investing in Sydney, it is
important to do your research, and seek expert advice. This blog
is aimed at assisting you in understanding the Sydney property
market, and what to consider when investing.
The first thing to consider is the
entry level price of properties in Sydney, and comparing this to
the other major markets in the country. Melbourne’s property
market, for instance, is approx. $400K, and Brisbane’s is $350K.
Sydney’s entry level price for an ‘investment grade’ property is
$600K, a $200K jump from that of Melbourne. There are of course
properties available in Sydney for less than this entry level
price, but they would not be considered ‘investment grade’, and
you would be compromising on location. With prices in Sydney at
this level, it is important to understand that an investment
grade property is not necessarily a house on a big plot of land
in the Eastern Suburbs, but rather; an asset that is stable (in
a location that does not fluctuate in value), and strong (has
forecasted wealth-building rates of growth).
A second point I’d like to touch on is
the misconception that rental returns are all that needs to be
considered. Yes, rental return is a significant form of
criteria, but we should not neglect annual growth of the
investment i.e. capital growth. The reality of investing is that
you can invest for cash flow, as in your rental return, or you
can invest for capital growth - generally speaking, one of these
must be compromised. It’s fair to say that the further away you
go from the CBD, the more likely you are going to find a
property with above average yield and you will compromise on
capital growth. The opposite to this would apply to properties
closer to the CBD; where you will more than likely compromise
the yield, but achieve above average annual growth.
Another mistake that amateurs can make
is expecting the same level of growth in Sydney that we’ve seen
over the last 5 years. The last 5 years have seen Sydney’s
property market experience unrealistic levels of growth, and
this has given many investors a false sense of confidence. Now
that the market is finally taking a bit of a breather, the
growth seen over these last few years cannot be expected. Even
though Sydney’s outer suburbs are still experiencing growth in
population numbers, this does not always equate to an increase
in capital growth. Population growth is one of many drivers of
capital growth, so it is very important that the other drivers
such as infrastructure spending are considered too. It is
critically important that you gain knowledge about the property
investment game, and become financially smarter.
Seeking expert advice and doing your
own research to attain a firm understanding of property
investment, is useful. If you are looking for expert advice,
look no further than Calla Property.
We have a proven track record of getting the evaluation, rental
and growth of a property right. We provide a seamless, complete
solution where we match you with a property that considers both
where you’re going, and where you’re at. To find out more about
property investment, and about how Calla Property
can help you; contact us on 0482 080 189.
We look forward to helping you build your investment portfolio.