NSW Is it too wrong to buy an apartment in Sydney?

Discussion in 'Where to Buy' started by JazzyW, 9th Jul, 2021.

Join Australia's most dynamic and respected property investment community
Tags:
  1. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    Hi everyone,
    I have been reading the forum for a while and my understanding based on the comments given in the forum is that it's the best to buy a house probably in a post code starting with 4 but my current situation is that I can only afford to buy up to 800k in Sydney by using First Home Loan Deposit Scheme and the cap is lower for Brisbane and the scheme is for PPOR and my job is in Sydney, so if I want to buy in Brisbane I have to wait another year so I can afford stamp duty and lmi on top of at least 10 percent deposit as an investment, so my other option is buying an apartment in Sydney as a PPOR, I was wondering if I should buy an apartment right now or wait another year to buy a house in Brisbane?
    I would appreciate to know your thoughts.
     
  2. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    What sort of apartment and which suburb?
     
    JazzyW likes this.
  3. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    I am looking at Turramurra, Lane Cove, Gladesville, West Ryde and Wentworth point. 1 bedder preferably 2 bedder where 2 bedder within that range is easier to find in West Ryde and Wentworth point but the banks usually have restrictions for Wentworth point and some on West Ryde too, so they don't let you get the loan with 5 percent but still if it's under 750k I can pay 10 % plus stamp duty.
     
  4. millie29

    millie29 Well-Known Member

    Joined:
    27th May, 2021
    Posts:
    155
    Location:
    Sydney
    Wentworth point is terrible I would stay away, prices have basically flatlined over the past several years. Better off buying a sturdy red brick unit in a small complex in the north shore that you can renovate later on.
     
    JazzyW likes this.
  5. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    Do you think Asquith and Hornsby are also better than Wentworth?
    Because most of the apartments in my budget in Lane Cove or Turramurra, Gordon are very small.
    I also have this preference of having unrestricted views which probably doesn't make much of a sense and it really limits my already limited options.
    That's why I was thinking maybe it's worth waiting and saving up for a house in Brisbane, but by that time the prices might have risen even further up.
     
  6. ndpjai

    ndpjai Well-Known Member

    Joined:
    15th May, 2016
    Posts:
    343
    Location:
    Sydney
    Hornsby and Asquith are definitely quality suburbs but buy 2 bedrooms in a boutique block say 2-3 floors no high rise buildings
     
    JazzyW likes this.
  7. spoon

    spoon Well-Known Member

    Joined:
    17th Nov, 2016
    Posts:
    1,762
    Location:
    Time-dependent
    Nothing right or wrong. Apartment is fine if in Sydney, make sure not something brand new and towers. Others have said: low rise without concrete cancers. 2 bedrooms for wider audience. Do you need to buy brand new to be eligible for FHB scheme? Not following the latest criteria as FHB scheme was many years ago for me...
     
    JazzyW likes this.
  8. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

    Joined:
    25th May, 2018
    Posts:
    2,407
    Location:
    Sydney
    Perhaps out of that suburb selection, avoid Gladesville. Gladesville is a lovely suburb for houses, but units are too small, and fairly generic.

    I think Lane Cove apartments by comparison are are undervalued right now, after coming off a period supply increase which is now digested.

    To your question overall - Sydney apartments can be a great investment if well chosen. Sydney-siders are used to medium density living and units in Sydney and Melbourne may be appropriate where the same investment in say Adelaide or Perth may not be. May successful investors in Sydney and Melbourne have built their portfolios out of units and townhouses. Go for it.
     
    JazzyW likes this.
  9. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    Do you think I should also stay away from the large complexes that have few blocks maybe only few stories but large number of units for example this one is in a complex of almost 150 units but it's not a high rise.
     
  10. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    No it doesn't need to be new, it needs to be under 800k from first of July, used to be under 700k.
     
  11. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    Thanks for your useful insight
     
  12. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    Thanks everyone for your help and advice.
     
  13. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,736
    Location:
    Sydney
    150 units is a lot. If you want to sell, what's to stop a more desperate neighbour from accepting a low offer made to them, and then that sets the benchmark price valuers and other buyers will value yours at?
     
    DadWealth, JazzyW, ndpjai and 2 others like this.
  14. Stoffo

    Stoffo Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    5,301
    Location:
    In the Tweed
    In addition to this
    Buyers will compare yours to a cheaper unit in the complex

    Yours might be north facing and not get any traffic noise, but will be compared to the cheaper unit on the south side with traffic noise (to push your asking rent/price down)

    When buying try to look at the purchase from a buyer looking for a ppor, as when you sell that is who you want to target
     
    JazzyW and Gockie like this.
  15. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
  16. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    How important do you think the age of a building is?
     
  17. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,736
    Location:
    Sydney
    Well, the good thing about that unit is that it has a garden courtyard and the orientation is ok. I tend to think you'll get more growth long term with most non strata houses on land in a major city though.

    I tend to look at the strata costs and sinking fund more than age. With an older one (like 1970's), you moght be able to get some capital growth through renovating it.
     
    JazzyW likes this.
  18. JazzyW

    JazzyW Active Member

    Joined:
    16th May, 2021
    Posts:
    25
    Location:
    Sydney
    I usually ask this question from the Agents when I inspect a property, but tbh I don't have much of idea how to understand if it's a healthy sinking fund or not when they say for example there's a balance of a million dollars in the fund, though probably it should be proportionate to the number of units or even costs.

    I ask if there's a major issue with the building or a cladding issue in newer ones, but really don't know how to better understand and how to ask better questions. I have heard that I can get strata report, have never got any so far, not sure if I can understand much from it.

    I agree that buying a house is a better option, though I can't afford it atm.
     
  19. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

    Joined:
    25th May, 2018
    Posts:
    2,407
    Location:
    Sydney
    The age of the building is important.

    To set this up quickly: in any property investment, there are two forces at play - the appreciation of the land, and the depreciation of the building. The land is usually putting upward pressure on the asset value, and the building is usually putting downward pressure on the asset value.

    Now, ideally, if you are an investor, you would be looking for an asset towards the end of its depreciation life, rather than the beginning. Buying older properties, that you can add value to yourself, minimises that dynamic of the downward pressure on the asset.

    This is why high rise newer buildings do not provide capital growth: there is not enough land allocation attached to your apartment to out-grow the depreciation of the unit itself.

    This is a long way of saying - within reason, buy older properties. They are mostly depreciated already and it minimises the downward price pressure on the asset.
     
    Sackie, Hari and JazzyW like this.
  20. Kevbo

    Kevbo Well-Known Member

    Joined:
    13th Feb, 2021
    Posts:
    194
    Location:
    Sydney
    Apart from Lane Cove (which has the best potential out of the four suburbs in your list), you should look deeply into upper north shore suburbs too. I feel that the super wide price gap between house and unit in these suburbs represent good opportunity when units are still relatively affordable at present.

    I’ve said it a few times, but Kogarah is a great option too. Though as a PPOR with no particular preference on which suburb I’d pick north shore followed by inner west.