First property in Sydney - apartment in Surry hills or house in st Mary /mt druitt?

Would like your perspectives on which option I should go with my first property (options and my current considerations below). My objective is to get in the property market and get capital gains, so I’m not priced out of the market later. Thanks so much!!

My situation:
26 yrs old
173k p.a. plus super and bonus
90k in ETFs, started saving 3k per mth in FHSS this year, parents have offered to help me with 200k deposit
Living in Sydney but may want to work overseas for a couple years, also not sure if I’ll live in Sydney for the rest of my life (might want to try living in Melbourne)
Timeline wise I’m thinking about in 12 months as it will take time to save up a deposit (wouldn’t like to sell my ETFs)

Options I’m considering:

Option A. Apartment in area in suburb near CBD like Surry hills
Something in a low apartment density, older apartment (hopefully better build).
Example: https://www.domain.com.au/6-5-13-hutchinson-street-surry-hills-nsw-2010-2017522660
Rationale is that it will still give decent capital gain and be more aligned to my personal preferences of where i like to live - I work and live in the CBD atm, enjoy having easy access to beaches, north of the bridge, Surry hills, grocery stores and restaurants of different cultures etc.

Option B: house + land in at St Mary’s / Mt Druitt area, near the station
Example:
https://www.domain.com.au/92-92a-callagher-street-mount-druitt-nsw-2770-2017411809
Rationale is that from what I’ve read, that area will appreciate in value with all the development going on in the area (probably more CG than option A) and it’s still pretty affordable to me. However downside is that I’d have to live in the property for 6 months and having a full hour commute to and from my work in CBD is very long, and I’m not sure if I’ll enjoy living in the area.

I’m leaning toward option A, but would really appreciate your thoughts and inputs, especially on any other options that should be on the table? Thanks so much!!

 

Given your age and income, save hard and you shouldnt be limited to one?

 

Option C - house in central coast plus change and buy regional

 

I'm not going to try to convince you of what option is best for you, but I will give you a few of my thoughts.

I'm not a fan of units, as a whole. You don't have total control, and there are always seems to be higher fees for body corp than is needed.

Land appreciates, while buildings depreciate.

That long commute is done by hundreds of people every day of the week, and they do it, so they can purchase a house...not a small unit.

The yield on either of the two properties isn't particularly great. They will be negatively geared for a very long time. The yield of a house plus GF should be more than a unit, but I don't know the city market.

 

I would go for a house on land because they tend to go up in value more than units or townhouses (depends though). My first thought when looking at the above link was, "nothing super flash" 2 br unit in Surry Hills is asking over 1 million bucks? I am shocked.

I think inner west terraces might be from about 1.5mill. Better relative value IMO. Of course, perhaps they are much more now, I don’t know.

 

U buying to live,

why would you consider mt druitt.

buy where you want to live and NEVER SELL your etf

Unpopular opinion
In 30 years with some luck your etf going be worth more than a house in mt druitt.

 

Hmmm....Mt Druitt today is not the Mt Druitt of yesterday. Lots of development going in and demographic vastly changing.

If you read the post, it's an investment. He's only living there for 6 months to get the grant.

 

Thanks! Yes I forgot that townhouses were an option. I’m thinking that townhouse in Hornsby could be a good option - what do you think? I think CG may be lower than a house in St Mary, but Hornsby is a well established area with a good school, and closer to CBD

 

I’m thinking that townhouse in Hornsby could be a good option - what do you think? I think CG may be lower than a house in St Mary, but Hornsby is a well established area with a good school, and closer to CBD.

Also based on what I read St Mary is pretty good bet for IP given the infrastructure developments and the airport? I thought about mascot (where the current airport is) and it doesn’t feel like a particularly in demand area, especially with the noise of airplanes flying overhead… could you please help me understand/ make sense of it?

(btw I’m a “she” )

 

If you are thinking that way, can you buy a duplex in a reasonable area? I feel duplex prices follow freestanding home prices pretty closely, but just cost a little less.

 

I agree with you. CG for a St Mary's house could be best, but if you can get a duplex (or house-like townhouse) in Hornsby, that's a good option. Duplexes tend to have similar capital growth to freestanding houses. And you can't really argue, it has a "better" (I can't think of a nicer way to say it) demographic that the Mount Druitt area.
Hornsby is good too in that it has multiple train options, including regular express intercity trains.

 

I'll be willing to wager my entire net worth this wont be the case. Within 10 years after the airport is fully done, new business parks are open and all infrastructure works are done Mt Druitt and St Marys will be worth a TONNE more money than it is today. Mark my words on it.

 

Ps. I really get the feeling you don't want to live in Western Sydney. I get that. A former colleague bought a home in Prestons... they moved out as soon as they could. The commute was a killer for them. Ditto people (I suppose, "Brother in law") who bought in Stanhope Gardens. They just felt it was too far out. Anyway, I do feel land values will keep going up. So, for CG purposes, you want your property to have land content

 

Just thinking, maybe something like this (note, I haven't done too much research on it, do your own due diligence).

11/9 Trelawney Street, Thornleigh, NSW 2120 https://www.realestate.com.au/property-townhouse-nsw-thornleigh-138319582

 

I'd go the apartment. Sometimes it's just about doing what's best for you, lifestyle wise. If you'd enjoy the heck out of living there then go for it.

 

They're not living there, except for the six months to get the grant.

 

Oh I see, then I'd go for the house then.

 

If I was 26 I wouldn't even hesitate to take the Surry Hills place.
You will (*I would) enjoy living there until the if/when family question comes up.
Get a housemate in since its a 2x2 and I doubt you would go too far wrong.

Sure houses typically beat apartment capital gains long term but Surry will always be very popular so it will always rent well, there are no bland high rise resi towers there, and its a much nicer place for you to live at while you do ponder your next move.
There is more to life than 'potential' captial gains imo.

Re the unit: I'd definitely keep an eye on strata levies vs rent... which is why I rent what you are considering and invest in shares.

 

Townhouses or villas are plentiful around Marsfield or Northmead. Both areas are totally different but are well placed near transport routes, employment corridors, unis, schools, hospitals, regional shopping centres, bushland etc

 

Just to throw in an alternative point of view on inner city apartments, when we were at a similar life stage we made plenty of money doing the inner city OO apartment thing across several purchases. You just need to make sure you're buying the right property in the right location (avoid high density, buildings with high strata costs e.g. shared facilities, etc) and ideally suited to a nice cosmetic renovation as a path to profit.

Market has been fairly soft since COVID with an exodus from the city in both owners and tenants which have hurt investors, but that may change when COVID eventually subsides and the international border re-opens.

Side note, with that gift you've potentially already got enough deposit to make it work without LMI.