NSW Is it a good idea to invest in Sydney?

Hey would it be a good idea to invest in Sydney? Or are prices way to high ?
If i was to do it it would have to be more towards the west. Even mt druitt prices are at 600- 650k median up to 700k...

I do live in Sydney though and i dont have a PPOR yet so maybe its a good idea to get one as a ip first maybe ill live in it later or maybe not .
My question is more so geared towards would it be a good idea to invest in Sydney?

 

My 0.05c

Is the overall risk now when compared to 18 months ago higher? Absolutely. Unquestionably, imo.

Could there be a decent amount of upside left? Quite possibly though impossible to know until hindsight is available.

Can you accept the risks? Is the possible upside worth it? How does it fit into your overall investment plan?

You need to decide.

 

Yields are low in Sydney, so if you are comfortable funding the shortfall in cash flows, then I'd purchase in Sydney.

Rates are low too, so less outflow, and may enable you to pay off debt faster.

How's your borrowing capacity? If you purchased elsewhere, would you still be able to get into the Sydney market in future?

 

I can afford to buy in Sydney yeah , and yes if i invested elsewhere i can buy in Sydney in the future just dont know if prices will keep increasing alot tho . Because even now for a ppor im not to keen on paying that sorta of money i dont see the value tbh

 

If this property could ever be your future home, may be worth using after tax cash savings toward it first (always seek tax advice though).

How long will it take to save the same deposit for a Sydney property in future if you used up your funds?

 

How are you going to feel if it doubles again in the next 7-10 years?

it might not, but it might. Do you want to take that chance? If you ever want to have a family and live in a nice place in sydney?

 

It depends what price range i aim for in other states but i have enough saved cash for a few properties. Even if i brough say 2 in Brisbane for 350k mark i can still afford to get one in syd right now. Just depends what price ranges i go for and how many i get. If i only get 1 then its no issue

 

So are you in the same position as me and you decided to buy in Sydney im assuming ?

 

no. Much older than you. Understood the power of leverage, and got lucky (it looks like).

history shows sydney tends to surprise on the upside.and it never looks cheap at the time.

 

What Trainee said!

 

Friend at work warned me not to buy in Brisbane

Havent you had this conversation before?

sydney looked really expensive in 2016. And then…..

 

So are you still investing in syd now ?

 

Hahaha yeah i wish i brought then . Yeah i know prices will keep moving.

 

TL;DR: I would not buy in Sydney now. Although I don't have a crystal ball, I will probably come back and have a look at Sydney towards the end of this decade (say 2027-28).

IMHO Sydney is approaching the peak of its current cycle. However it is impossible to pick the top. But based on the past experience, a boom often ends abruptly before everyone realises it. It can get quite illiquid in a flat / declining market and hence it comes with risk if you buy near the peak.

However I do believe it’s possible to do proper risk vs benefit analysis. Sydney has gone too far into its current cycle and it's just not worth it. Most of the suburbs in Greater Sydney have moved up at least 120-130% this cycle according to RP Data. The rental yield in a middle class suburb has dropped from ~5% to below 3% and if you buy it now, it's more risky from both equity and cashflow perspective and you need to be aware of the possibility of having negative equity and negative cashflow at the same time.

I never buy because of rental yield. For example, I have never bought in those places that people claim to be 'high yield' (Some of those places can give you 10%+ yield on paper). But a 5-6% rental yield means I can hold them more comfortably and you see that sort of a yield before a boom in most places.

 

Depends what Sydney means to you.

To me its home (whether I live their or not) so I always keep one in Sydney.

I had people tell me Sydney was overpriced when the median was like 500k (those suburbs are 1 mil plus)

It might be overpriced now but what happens if it doubles.
The question you ask is too broad for strangers from a forum.

 

Did you listen to your friend? I hope you did not. You would have lost a crapload of money recently. Brisbane is on FIRE!!!

 

is unfortunately not true

 

very well said.

sydney is not the only city in australia.

 

We looked at where to buy in 2016. We thought Sydney was too expensive and priced out. We didn’t buy in Sydney but knew had to start from somewhere. Instead of sitting sideline, we bought in Brisbane in 2016. Yes watching Sydney going up and Brisbane staying static was very very painful. Then we bought in the markets we knew- Newcastle and Maitland. In 5 years, we build a bit of equity. That’s what @Trainee said- leverage.
Maybe I could say this now because Brisbane started moving. But to me - time to buy is now- whenever I can get finance because I am not those smart people who can time the market. Of course where to buy and what to buy needs a bit of research (and luck) but taking action now (@Sackie always says) is also important. Every market will be up and down but as long as we have buffer/balanced gear, we should be able to hold.

 

Yes, if you are a positive thinker and No if you are a negative thinker.