Sydney Property Investment Overview:

The ANZ Property Outlook - March 2009 reports that Sydney median house prices have seen property investment levels flat-lining for around 5 years. While this has helped to restore affordability conditions it has, in the face of prohibitive developer charges seriously undermined the economics of home production.

Affordability will remain a constraint in Sydney Property investment scene during this period and the upturn in dwelling activity is projected to remain well below the underlying demand...
Consequently, prices are expected to grow modestly in 2008/09 and to accelerate in 2009/10 and beyond.

Sydney's median house price market is forecast to grow a total of 7.5 percent over the two years to 2009/10 and continue growing into 2010/11.

Infrastructure Developments

The Sydney Metropolitan Strategy says Sydney needs to cater for an extra 1.12 million people in the next 25 years. It remains the most preferred destination for the 146,000 or so migrants taken in each year. So, be prepared for the hundreds of new apartment towers and town houses that will sprout up in established suburbs along the train lines and bus routes in the coming 25 years.

As the population balloons to 5.3 million by 2031, 640,000 new homes will be needed about a third will be directed towards new releases in places such as Rouse Hill but the rest -some 440,000 homes- are to be built in established suburbs. The most development will be in the CBD, equating to about 55,000 new homes by 2031.

The plan is to have these homes concentrated around established suburbs within walking distance to shops and services. It is envisaged that two-thirds of the extra homes built in the next 25 years will be within 800m of a train station or 400m of high frequency bus services in the morning peak time. About a third of this type of development will be in the inner west while about 42 percent will be directed towards the west-central region taking in Parramatta and Fairfield.

Large infrastructure development can be an important leading indicator for future population movements and hence property prices.

Whenever a sizeable piece of infrastructure is opened, you have an impact on the local market. The M7 and M4 freeway and link systems in Sydney will have a "profound" effect on population shifts. This was very evident on the Gold Coast as a result of the Brisbane to Robina rail link. The centre of Sydney is moving west ward and the new road infrastructure has accelerated this. The Cross City Tunnel has made coffee in Norton Street, Leichhardt an easy option for Bondi residents.

Where are the "Value" buys

The challenge, if you are going to buy an investment property in this market, is you need to have an eye for both up-and-coming suburbs and the critical issue of rental yield. Premium suburbs within 10 to 12km of the CBD, those near water and those that have scarcity value are likely to perform well.

To be a successful investor in Sydney it is best to identify areas that have finished the "down swing" phase of the property cycle and are now starting to move forward.

Hot spots in property activity offer high capital growth opportunities in the Sydney market as well as southeast Queensland (Brisbane and the Gold Coast) where high levels of migration are evident. For further information Request Free Information Pack.

Summary

For those thinking of property investment in the Sydney real estate market there are many issues to consider. The gains can be great, but it’s important to make prudent decisions regarding location, type of property, the amount you want to spend and the returns you can expect.

Of course, there are many factors to consider when planning a property investment, including:

- Location – suburb and proximity to transport and facilities;

- Cost – some areas where price growth has been good in recent years now have a high entry level;

- Previous capital gains experienced by other properties in the area;

- Rental returns currently being achieved in the area;

- Any planned changes to the area that will make it more or less desirable for renters.

The demand / supply balance suggests that the New South Wales property market is already in chronic undersupply. With underlying demand at around 41,000 dwellings and approvals trending at an annualised completion rate of just over 16,000, the balance is deteriorating at a rapid rate. For the savvy investor (right across Australia) this is a particularly good time to invest.

Remember property investment is a long term strategy. The idea is to accumulate property in between each property "boom" during your working life without affecting your lifestyle. Property booms will inevitably slow down, but the factors that influence this are simply part of the property cycle.

The South East Queensland property market remains an option worth considering when you consider comparative house and land prices in Brisbane, the Gold Coast and Sunshine Coast. This area is consistently the fastest growing region of Australia which translates into high rental demand.

For further information on properties in these areas and property investment in Sydney Contact Us

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