Buy now in Sydney or Queensland for the long term?

[FirstTimeBuyer]

I'd like some opinions on whether I should buy my first IP in Sydney or Queensland. My aim is to hear out different reasonings for why I should do one or the other that I may not have considered.

I would be buying now with an aim of benefitting from the investment in 30 years time (either through passive income or selling off the property) and so this would be a long term decision with an aim to grow capital growth in the short to medium term to help in the purchase of future properties.

If I was to buy in Sydney I'd be willing to go more "all in" and purchase something up to about $1m. If it was Queensland purchase I'd be a bit more reserved and look at something around 500-600k. I reside in Sydney so I'm willing to take a bigger risk in Sydney.

I've written up a list of pros for each state below. I guess my aim is to add to the lists with other factors I haven't considered.

Queensland
* Cheaper less capital invested
* Gives us a bit more flexibility for a second investment in a shorter time span quicker.
* Complications would be hard to handle. Finding a property manager etc would be harder to do remotely
* Potentially better capital growth in the short term
* Better rental yield

Sydney
* Better long term capital growth prospect
* Easier to manage
* Second purchase would potentially be at a later point in time as we'd be more financially invested.
* Potential dip/correction in the next 5 years; however if there was no dip the market would be harder to enter later.

Atm I am leaning slightly more towards Sydney as I believe long term capital growth would favour Sydney more.

 

[jerrybee]

My strategy is to buy in Brisbane now to take advantage of quicker CG in the short to medium term, and then use that equity to buy in Syd in the next cycle. My hope is that the boom cycle for Bris will nicely coincide with a plateau (or slower relative growth) in Sydney in 3-5 years time.

 

[hugh72]

I think its a good idea to have your investments spread out in all the major population centres eventually with purchases in different markets depending on where you see value and opportunities for growth at a particular point in time. Percentage capital growth over the long term is remarkably similar in our capital cities with short term divergences from trend. They all have population growth which ebbs and flows.
Considering your help time frame I don't think you can go too far wrong with any of them provided holding costs are not high as this will slow the opportunity to purchase again quickly, it depends if you can buy well in either market and this is probably easier in BN at this point in time.
Don't be put off by purchasing remotely provided you do your D/D. Something around the corner you may be able to drive past and see how poorly the garden is being maintained but if you manage through a pm what else would you actually do yourself?

 

[pickle pickle]

As it is your 1st IP and you live in Sydney I would go for Sydney rather than Queensland.

I am assuming you have a better idea of the Sydney market and suburbs compared to Queensland.

Yes it is a good idea to buy in different locations however as it is your 1st IP go for what you know and learn your mistakes in your own backyard rather than someone elses backyard.

My understanding of Sydney is that there just isn't any more land to really develop. That is a huge plus for Sydney.

I'm not conviced that Sydney will have that much of a correction. I have seen data that for the last 10 years Brisbane prices have outperformed Sydney. Sydney is just having it's time for CG growth right now. I can't see any reason for the short term why it can't continue. Sydney is an international city, Brisbane is a nice city but isn't as desirable for the international players.

For your 2nd IP by all means venture into other markets. You also have to consider the rates for Queensland. They are much more expensive than anywhere else in Australia.

 

[hugh72]

There you go, both sides of the argument. Best to do what you are comfortable with for your first investment

 

[cadence]

If i was in your situation i would buy in Sydney

 

[JDP1]

You mention your aim is to maximise cg short to medium time frame in order to buy subsequent properties. Given that, then I'd buy in brisbane.

 

[Ausprop]

do you believe in property clocks?

 

[Redom]

do you believe in property clocks?

IMO this is worth considering and making your own judgments/assessments of this may help decision making.

If your broader plan, beyond the next property purchase itself, is to have assets spread across Australia, it may be best to apply some reasonable guesstimating of where each city is at on their property clock. With a plan and some broader thinking, you may end up having a Sydney asset at some point in the future anyway, it needn't be your next purchase. If thats the case, it may be worth considering putting your money in the Brisbane market and then returning to the Sydney market down the track.

Cheers,
Redom

 

[knightm]

do you believe in property clocks?

Aus do you?

 

[Rolf Latham]

a 30year window.............

thats a big ask

5 mths, 5 years , sure there are some trends that you can hitch your wagon to but 30 years.

Historically one would say Smogney................... but

ta

rolf

 

[bob shovel]

you know sydney and the suburbs but why pay a premium for knowing your way around, in the short term youll lose out. Buying in bris youll get the gains quicker for the next buy.

Because you know sydney it does not make it easier or any benefit to manage the property, thats not your job! doesnt matter where you or the house is! youll get statements emailed and phone calls saying "the tenants want another lease"! buying in sydney you'll just be able to drive passed and say "yep.. its still there"

If you arent prepared to spend a mil in bris, thats all good it will get to a mil or close to while the sydney one hasn't moved (exaggerated statement of course)

 

[jerrybee]

buying in sydney you'll just be able to drive passed and say "yep.. its still there"

lol that's a funny way to put it

 

[Ausprop]

Aus do you?

I'm torn on this matter. All things being equal the traditional clock should apply, however it clearly is broken because we have a common driver i.e. interest rates yet all city markets are at different points. So could we just say well ok let's call it a cycle. Can we even do that? Perth isn't cycling down, it just got hammered because of the oil price and Rio and BHP decided to battle it out.

There are certainly trends, resulting from extraneous factors.

So if you believed in the clock you would go buy Brisbane.

 

[norwoodman]

By Queensland, do you mean just Brisbane or actually mean Queensland, or south east Queensland...? There's at least a dozen major markets all doing different things around Queensland at the moment.

 

[hugh72]

By Queensland, do you mean just Brisbane or actually mean Queensland, or south east Queensland...? There's at least a dozen major markets all doing different things around Queensland at the moment.

That's right, just reread the op, Qld has lots of regional markets doing totally different things. I assumed BN as many people from SYD think thats all there is but if the op is unsure about SEQ then anywhere else at this stage in Qld is probably a leap too far

 

[virgo]

S or Q?

Hiya

Is there a third option?

But in Sydney BUT just not now

 

[FirstTimeBuyer]

Thanks for all the replies! There were a few things that got me thinking:

* Are there any guidelines on some of the DD I should conduct if I was to buy interstate? The things that come to mind are: doing my research in the suburbs I'd want to buy, finding a good buyer's agent to help me with the areas I'm looking at and then finding a good property manager.

* I think I may have over estimated the benefit of buying something in Sydney. I would benefit in knowing the area better when buying but it doesn't seem like there is much benefit afterwards.

* I'm a bit mixed regarding property clocks. I remember hearing about 3 years that Sydney and Brisbane were at the 2 and 6 o'clock cycles on the property clock. Looking back it doesn't seem to have played out that way.

* If I was to purchase in QLD I'd start off by looking at Brisbane or Gold Coast as a broad area. I'd compare job growth and population growth trends, then future infrastructure plans, decide between the two then look at individual suburbs after that. Are there other indicators people usually use to zone in on an area?

Thanks all

 

[LeoT]

I think Brisbane offers some great opportunities but putting the property clock aside, I think its really important to buy below market value and be able to add value to anything you buy in any market so your not completely at the whims of waiting for CG. Just my opinion.

Leo

 

[travelbug]

I think Brisbane offers some great opportunities but putting the property clock aside, I think its really important to buy below market value and be able to add value to anything you buy in any market so your not completely at the whims of waiting for CG. Just my opinion.

Leo

Yes I agree. Buying in Sydney or Brisbsne at the moment you'd be hard pressed. For a reno the OP would obviously be more able to do that in Sydney.

I'd vote Sydney but I would invest money elsewhere for a few years and buy 2018-19 when it's not a sellers market. Much more chance of buying under market then. I can't see the point of holding a property for years with no growth. Of course others are of the view that property goes up every year.