Thinking of purchasing in either Brissy area or Sydney. But in regards to FHBG driving up prices, I'm thinking it may be smarter (and get bargain)
In my experience there are bargains to be had in the 2nd tier - yes. However, there are risks in buying above the median price of a suburb:
1. Lower pool of tenants to choose from who can afford the higher rent
2.
Generally lower rental yield. e.g. $350K house might rent for $350pw but a $700K house may not rent for as high as $700pw.
3.
Possibly lower CG than the suburb
4. When you have a vacancy - $700pw is a lot of cash to find to fund the mortgage
5. Lower pool of buyers if you ever want to sell the property down the track
(some assumptions in all the above)
to combine with other family members looking.
This adds another layer of risk to your investing. See other threads on investing with friends and / or family
Does this mean less competition?
Yes
Chance to get a great price?
Yes
Stacey, some would say: wait until the FHOG/boost is over. They said that when it was to finish 30 June. Then 30 September when 1/2 boost kicks in. Then 31 December when its back to 'normal'. But by then investors might be back pushing up prices (or at least putting a floor under the lower end of the market).
I think you just have to do what you have to do without violating the 'rules' of buying at or below median price for the suburb - for safety. Hoping for future price falls is not a strategy. But hey - if you get a 2nd tier property for a fire-sale price that is at the upper end of the median - I'd go for it.
My first strategy, if I were in your position, would be to still buy under $500K but to position myself to be 'first-cab-off-the-rank' when a good listing comes up.
