Is Sydney too Expensive?

We've got a 420k loan approval and looking at getting our first investment property in Sydney (not interstate, just Sydney until we get the hang of it).

However, Sydney seems to be a buyers market. Every house we've inspected, we're continually outbid. There are even people waiting around, bidding and counter bidding.

Should I be holding onto my money & wait until things stagnate?

p.s. I'm looking at units/town houses
 
I think you mean its a Sellers market if there is strong buyer demand.

In relation to your question, it depends on your chosen property investment strategy whether to hold off or purchase.

What is your chosen strategy?

What are you ultimately wanting to achieve and in what time frame.
 
Hi noodles, you're not the only one feeling that way ...

It's been like this for a while ... and it feels like it won't change overnight (with further interest rate drop predicted).

For your budget, are you looking around the western and southwestern suburbs? Those areas have really taken off since the granny flat rules were loosened. Lots of investors snapping up properties with very average houses on them but they are factoring the returns from chucking a GF on it. The demand is very high. I looked for a while last year and realised that if you only had time to inspect properties on a weekend (coz maybe you have a job Mon to Fri), you're really looking at reject stocks. All the good ones would have been taken up by full time investors / buyers agents already.

People's been saying the Sydney market is expensive for as long as I remember. But I always felt it wasn't too ridiculous ... up until last couple years.

I recently decided to look interstate. It's a daunting experience. I would have never previously considered it. But to be honest, the process is not that different to buying in Sydney. You will find that there are lots more options. For example, you can easily buy houses within 30km to Melbourne CBD and Brisbane CBD within your budget. Of course, you have to assess each suburb to work out CG prospects and/or yield to make sure it's a good buy. I'm sure I've made some very bad decisions which I would not have made if I bought in Sydney, but for half the price you can "afford" to pay for these lessons.

If your heart is set on Sydney ... then maybe consider a Buyers Agent. I would have never considered engaging one myself before as I've always DIY'd, but I think it can be justified in this kind of market. It will take a lot of stress off you and save you time. You might also want to consider units which will be a lower entry point. The yield is better and they have also done well from CG perspective.
 
What is your chosen strategy?

What are you ultimately wanting to achieve and in what time frame.
Hi Rixter, we're looking at buy & hold until retirement, which at this point is 18 years away.

...you're really looking at reject stocks. All the good ones would have been taken up by full time investors / buyers agents already.

... For example, you can easily buy houses within 30km to Melbourne CBD and Brisbane CBD within your budget.

... You might also want to consider units which will be a lower entry point. The yield is better and they have also done well from CG perspective.
Hi cadence, I'm self-employed so I'm flexible with my time. Can you buy during weekdays? The agents I've talked to said they'll only take bids during the inspection - which is normally Sat/Sunday when the crowds are out in full force.

We may have to start looking at Melbourne & Brisbane soon. I'm looking at units and town houses in Southwest/Central Coast, but I'm always getting outbid :mad:
 
Hi Rixter, we're looking at buy & hold until retirement, which at this point is 18 years away.
Excellent ..

Have you sat down to work out the specifics such as What size asset base & annual income you need it to be generating so you can retire in 18 years?

How do you plan to generate it?
 
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Excellent ..

Have you sat down to work out the specifics such as What size asset base & annual income you need it to be generating so you can retire in 18 years?

How do you plan to generate it?
I haven't done any of those. I've just started a trial subscription with Real Estate Investar. I look to see if a property will have good capital gains and be cashflow positive, and I make my decisions on those basic criterias.
 
I haven't done any of those. I've just started a trial subscription with Real Estate Investar. I look to see if a property will have good capital gains and be cashflow positive, and I make my decisions on those basic criterias.
I strongly suggest you work all those things out first before setting out because ultimately that's what determines where you are wanting to end up (your destination) on your investment journey.

Your investment strategy determines where, what & asset base size you need to accumulate along your journey.

If you dont know where you are going, you will never be able to plan your route (investment strategy), monitor your progress traveled and know when you have arrived.

I hope this provides some food for thought.
 
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I've just started a trial subscription with Real Estate Investar. I look to see if a property will have good capital gains and be cashflow positive, and I make my decisions on those basic criterias.
That's the reason you are always getting outbid. You won't find positive cash flow properties in Sydney at present - unless IRs fall some more (which looks likely).
 
I've just started a trial subscription with Real Estate Investar. I look to see if a property will have good capital gains and be cashflow positive, and I make my decisions on those basic criterias.
On what criteria do you base whether a property / suburb will experience good capital gains?
 
I haven't done any of those. I've just started a trial subscription with Real Estate Investar. I look to see if a property will have good capital gains and be cashflow positive, and I make my decisions on those basic criterias.
Just try and think about the subscription and the people in between the pages,if you look that some of the investors that come to print with 5-20 properties on interest only payments worth 2.5 mil on paper with a debt of 2 mill,then as it always happen before and Australia is no Japanese set-up
when the rates start going the other way what happens??..
 
From up North here in BrisVegas the answer to your question is a resounding Yes. Sydney seems like an incomprehensible market.

It's extraordinary that we live on one of the largest, least populated landmasses in the world with four or five dense(ish) centres with huge price tags. I think it helps keep our standard of living higher though so not the worst thing.

Keep it up though I do love a bit of CG!!! Just move some money north though:D

I'm no D&Ger but I wonder if at some point we'll look back at this market and say "What where we thinking, of course those prices didn't make sense". ;)
 
That's the reason you are always getting outbid. You won't find positive cash flow properties in Sydney at present - unless IRs fall some more (which looks likely).
Course you will :) Starts with N, ends with S, has RA in between. Penrith 2 Bedroom , 2 bath + parking for example. 410-420K. For a person on a Marginal Tax Rate of 32.5% they will generate almost 8K CF+ Tax Free in Year 1. For a person on a 37% MTR they will generate almost 9K CF+ Tax Free in year 1 , and Penrith seems to be on several "hot spot" lists or their equivalents, due to the expectation that Badgery's Creek Airport will transform Western and South Western Sydney across the next 10-15 years . There would be other CF+ opportunities with older bungalows in the west and south west where a granny flat can be added. Admittedly it takes a little lateral thinking to get superior CF results in Sydney, but its readily achievable, so if you want to have an affordable foothold in Australia's largest and most undersupplied ( and geographically constrained) market , those are just two ways to do it
 
Course you will :) Starts with N, ends with S, has RA in between. Penrith 2 Bedroom , 2 bath + parking for example. 410-420K. For a person on a Marginal Tax Rate of 32.5%...(snip)
:rolleyes::rolleyes::rolleyes::rolleyes:

I don't think it's too expensive but the yields do need to play catch up a little before diving back in.
 
I was reading an article today in SPI today and the tipsters predict good growth in some parts of Sydney in 2015. I had thought the peak was hit, but they've listed a number of suburbs they think still have a way to go. Some included Erskineville, Ambarvale and Baulkham Hills.
 
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