Where to invest in Sydney

Discussion in 'Where to Buy' started by Ladymelissa, 27th May, 2015.

  1. windyzz

    windyzz Member

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    Best case scenario? Lol... silly....
     
  2. Nick Valsamis

    Nick Valsamis Vantedge

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    Of course. I was just including some things to consider since many people are suggesting Brisbane and some people tend to blindly follow without doing their own research and planning for their circumstances.
     
  3. MyPropertyPro

    MyPropertyPro QPIA (PIPA)

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    Whether or not there is more growth in Sydney remains to be seen. In any case, it's really the yields that are the problem in Sydney now. After tax cash flow is terrible, good depreciation or not. I firmly believe that if Sydney isn't at the top of the market, it is very, very close.

    There is little to no more room in borrowing capacity for a lot of people now and investors are having more restrictions placed on them by the major lenders which seems to be tightening day by day. Income growth is going no where and the main players that are left are cashed up downsizers. I was involved in a purchase on Monday where our client missed out on a 2,1,0 that went for $1.3mil (even that was an emotional PPoR that went beyond the upper valuation of $1.16). The first home buyers were knocked our almost immediately and it became a Dutch Auction between 3 downsizers. Another 2,1,0 went in Kirribilli on Saturday for $1.51m.

    If you're investing, you'd be crazy to buy in Sydney right now in my opinion. For some reason, people get fixed on what they perceive to be the best opportunity in Australia because of all the recent growth. Unfortunately, for those of us who have been in this long enough, we know the exact opposite to be true. Once a market has had growth like that, the opportunity costs of getting in with a risk of a stagnation period are varied and many. Australia has thousands of property markets. Don't become fixated on the "hot spot" that is long gone due to FOMO!
     
  4. datto

    datto Member

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    Mi Lady, I 'ave the answer to your dilemma.

    Grab a 50c coin and a marker (any colour, but preferably black). On one side of the coin write Parra, on the other side write Dulwich.

    Flip the coin in the air...and that is your destiny. In 5 years time you will tank me.
     
  5. C-mac

    C-mac Member

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    Sergio, I really don't know if you are here to sell stock, or you arent selling stock but just genuinely believe that off-the-plan purchasing in Sydney right now is a smart move?

    If its the former, please make your sales intentions known, if its the latter, I'd strongly recommend you do further research as your suggestion is simply not a good one.

    To the poster: I agree with other established long-term Somersoft forumites who have commented on otp in sydney.

    Simply, DON'T DO IT! It would be one of the worst possible property purhase decisions that could be made, nationally right now. Its up there with inner Brisbane, inner Melbourne, and the emerging Gold Coast monstrosities being built right now...
     
  6. Befuddled

    Befuddled Member

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    Bought OTP in Sydney in 2012 and 2013. Both have appreciated considerably. But honestly had nothing to do with savvy investment. It was all due to buying relatively early.

    Now that the herd mentality has set in there's no way I would buy OTP at the present point in time.
     
  7. Jacque

    Jacque Buyers Agent and Bookworm

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    Hi Melissa

    Only you can decide where to buy however your budget will obviously limit you here. We have bought for many clients in both areas however have more purchases in the Parramatta region. Lots of interest here and in surrounding suburbs means that your typical 2x1x1 older established 60's/70's 3 storey walk-ups (well located) are now in the mid $500K's+ region. Harris Park, Rosehill, parts of Granville still good value in comparison and you will pick up a 2 bedder here for less. Agree with Prop about Inner West though- you'll need min $100K more. Happy hunting :)
     
  8. Ladymelissa

    Ladymelissa Member

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    Thanks for your replies. The main reason I have no interest in investing in Brisbane is due to higher unemployment & low employment growth also home values have actually fallen in Brisbane by a total of 1.4% over the past five years.

    I still think there may be growth in sydney over the next 2 years & just looking for suburbs which are still affordable to the average family, close to transport, universities etc...
     
  9. MyPropertyPro

    MyPropertyPro QPIA (PIPA)

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    Like Sydney, "Brisbane" is not a property market. There are many different markets in Brisbane so state that Brisbane home values have fallen by 1.4% in the last years does not accurately reflect growth cycles in sub-markets. For example, the inner city apartment market will perform very differently to the inner-middle ring housing market in the next few years which will perform differently to the northern suburbs housing market which will be different to the southern suburbs apartment market...you get the picture.

    On a broader picture, even if this were true for a given suburb/market, if fundamentals are good, the fact that prices have fallen in a given market is a good thing. Everything moves in cycles and you want to catch an up cycle before it's happened. When the data shows that prices have fallen and stabilised, it more than likely means it's due for growth all other things being equal. This is also the point at which you will generally find your best yields, minimising your holding costs and allowing you to take advantage of the up cycle in that market, use the equity on a stable cash flow base and reinvest it elsewhere. Market fundamentals for Brisbane are quite strong so I'm not sure at what data you're looking at. I'd be interested to know your research sources.

    By buying into a market at the top (like Sydney - let's assume it's just one big market), not only are your yields poor and therefore holding costs higher - which by the way, if they're high now wait until interest rates go up - then you sit in a stagnation period, or even a correction, for quite a while and depending on your personal cash situation, miss out on short term equity for reinvestment. It depends on your plan - if you want to buy a few properties, this kind of strategy of just following markets that have already boomed will significantly slow your growth plan. If you just want one property and that's it, well, in long term Sydney probably won't have any problems. As I've mentioned, it's just the terrible holding costs in the mean time. Remember, if you don't get growth beyond what your after tax cash flow is costing you, the investment is a waste of time.

    Good luck with your plan
     
    JohnHenry likes this.
  10. LeoT

    LeoT Member

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    With all due respect mate your advice is very poor at best. Unless you actually invest in property yourself and have made a great deal of gains from OTP property consistently, i wouldn't be going down this route. And that's putting it mildly.

    Leo
     
  11. LeoT

    LeoT Member

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    Fantastic post mate!! Outstanding. If more investors understood and applied this i suspect we would see a much higher %age of investors actually building great wealth a whole lot faster to achieve their goals.


    Leo
     
  12. LeoT

    LeoT Member

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    Hi LM,

    Honestly its great you want to start investing although i would strongly recommend you take more time to learn and understand the whole investing game, especially the fundamental growth drivers of property markets and cycles. It also comes down to what are your investment goals. If they are large and lofty in an ASAP mindset then the best thing you could do right now is learn a little more.

    Leo
     
  13. MIW

    MIW Member

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    Yes I totally agree with you. I think most do not do the required research and then they get burned, or need to wait longer.....or even sell out.
     
    Nick Valsamis likes this.
  14. Deltaberry

    Deltaberry Member

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    Haha that's quite funny.

    I actually don't like taking cheap shots at people who just have a different investment philosophy to me, but I just can't resist chiming in and saying I completely agree.

    That's like one of the worst pieces of advices I've seen.
     
  15. MyPropertyPro

    MyPropertyPro QPIA (PIPA)

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    Thanks LeoT :)
     
  16. JohnHenry

    JohnHenry Mister

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    Yes for some area in Brisbane CBD, it has been oversupplied due to the interstates and overseas investor buying OTP apartments in: Fortitude Valley, Newstead and Southbank.

    But I believe you can still profitable to buy existing house in Mt. Gravatt area or new House & Land package like in Park Ridge this area will be the "Schofields" of Brissy soon after 5-7 years.