NSW Looking to buy - few considerations?

Hi all,

I have found a good 1 bedroom unit at Rhodes with an amazing water/city view for roughly 740k.

It is expensive than the average 1 bedders around due to the view, high level and the decent infrastructure of the building (built by Billbergia).

This will be my first home and at the beginning, I was looking to purchase a property for investment purposes but the prices, especially areas that I'm accustomed to which is anywhere in Sydney and surrounding suburbs (North Shore, West, South etc.) - I believe it's impossible to buy a house with 800k budget and any decent 2 bedders are way over 900k as well. I do not want to invest or purchase outside of Sydney as it's pretty unknown territory for me.

I do think location matters so I was looking at Sydney CBD, Zetland, Alexandria, Chatswood, Five Dock, Rhodes, Burwood and few areas - not to expect any growth in these areas to be honest as they are already very high in sale prices but wanted to get high rental income in return if I do only live in for the first 6 months and move back to my parent's home and rent it out as an investment (the rental demands are crazy at the moment, especially at Rhodes).

My question I think is around what makes the property price maintain its value without significant drops. I had my parents bought places at Merrylands/Parramatta before but we have had significant losses (yes, it was our mistake as we weren't familiar with property market back in 2015) - so we bought that off the plan for around 600k and now we can't sell it for even 500k despite the apartment being located very close to the station and shopping mall.

I'm worried with this Rhodes property because there's more apartments coming in of course (Rhodes Central being one of them) but the cost of these new apartments are bit crazy. 1 bedder and 1 bath started without car space started from 780k! Currently, the Rhodes 1 bedder market is around 600-750k I think depending on location and level but I'm worried on one side that if I bought this property, the value will go down due to other 'newer' apartments coming in and making both sale price and rental demands go down. On the other hand though, I think with Rhodes, most of the lands are already occupied and the only way I see it develop or more apartments being built is on the other side of the station (where all the houses are) but that's not gonna be within 10 years. Also, I think having a city/water view is a luxury and I think it's something that could be an important factor in ensuring the property maintains its value... I could be wrong here but would love to get people's opinion here.

I looked at areas like Zetland and the property there for one bedder is 700-750k but rental averages are over $550 to up to $675 per week which is good return imo. Rhodes average is around $500-640 per week so I told myself before I should buy it at Zetland if the property price is same but rental return is higher. However, this property view wise is good and I think with life style changing where there's no need for focus on living close to CBD for work, Rhodes could also be ideal investment for long term purposes?

Sorry to babble on but would love to get some opinions.

Thank you!

 

Demand and supply. What is the demand for 1 bed properties? Is that going to increase? What is the supply of 1 bed properties at Rhodes in a highrise building?

You clearly want 'nice' stuff, that's why you can't find 2 bedders less than 900k.
You want it because you like living there. But is buying there the only way to live there?

Property investment works because you get leveraged capital gains. If you don't expect capital gains, and your 'high' rents will get eaten up by high body corp, while your unit just becomes the 'older building' as new buildings are built.......

 

If you're looking to turn it into an investment in future I'd do your numbers on what that looks like.

Trainee has pretty much nailed it lots of those apartments at/round Rhodes are newer builds with high strata costs and plenty more supply coming online which may limit potential capital growth.

All comes down to supply and demand and if you think the specific unit you're looking at has some kind of competitive advantage vs. what is currently and will be coming into the market in the future.

 

Retention of valuation would be more likely in suburbs that are not deemed high density - it is harder to get finance in high density suburbs and usually require a larger deposit so there will be less buyers and less demand which can mean lower values. I know that Rhodes is definitely a high density postcode but not sure of the others.

 

Is there a website to calculate/measure this? I can only go by vacancy rates and what’s out on the market really.

SQM Research - Property - Residential Vacancy Rates - 2000

The vacancy rate is quite low so there are definitely demands. Generally, 1 bed demands are lower than 2 beds for sure. Many of the new apartments don’t have car space with 1 bed so this might be attractive.. not to mention again, the City/Water view which some of the 1 bedders won’t have?



Quick search in RP data. shows there’s about 24 one bedder properties on the market at the moment. Just month of March, about 7 properties were sold.. there were slight increase in sale demand but more increase in rental amidst COVID/Working from home being a thing…

Investment Property Rhodes, NSW, Canada Bay, 2138
https://www.realestate.com.au/neighbourhoods/rhodes-2138-nsw

My budget is 800k so hard to find decent 2 bedder - after seeing the loss with investment in Parramatta and Merrylands and also my agent told me not to buy in the West (Homebush, SOP, Parra etc.) - I'm looking at Rhodes/Zetland/Alexandria. I do want the building to be at most 10 years old so you can define that as nice I suppose but the strata for this Rhodes property I want to buy is $650 which is very low.

Quoting both here - true, guess my question is despite all these new buildings coming up, one of the distinctive advantage this property have is the view and being at high level - so I can say I'm paying 50-100k more for this. Is it worth it? I'm not sure but it should have some advantage I think. Not many units would have this view since many of the Rhodes units/apartments are lower level apartments bar few buildings + some units in the the newly built ones at Rhodes Central.

True - I don't foresee this property going up too much (demands are steady at Rhodes) but I'm really hoping it doesn't go down at least.

Thanks everyone btw for the post - really appreciate it!

 

You might be able to get an older style 1960’s 2 bedroom unit in Epping for seven’s in a smaller block which may represent a truer market value than buying one of the new ones from a developer.

 

Parramatta, merrylands, rhodes, zetland et al. You see a pattern here? Lots and lots of supply.

unless you have a good reason why the one bed will outperform, why would you repeat a investment strategy that failed? if youd bought a house in western sydney in 2015 you would have at least doubled the purchase price by now.

 

If you care at all about the investment factor with your purchase, DO NOT buy in these high strata, over priced areas with massive supply and low demand. I can barely think of anything worse.

 

You just want a nice place to stay with views and bragging rights on instagram? Rent.

 

I'm not going to live there in 6 months to 1 year time - I said this many times already. I will probably turn it into investment based on rental outcome but would like opinions here. I don't do instagram or none of those social media **** so please...

Yes - not high strata, $650 pq which is low but I do agree with being over priced. Not sure about massive supply and low demands at Rhodes but I think there is definite demands at the moment. Which newly built apartments coming in and with international students/young couples increasing, I do think Rhodes would be good place for people to consider (especially Asians/Chinese given they dominate these areas).

Merrylands, I agree. The fam didn't do proper research about the area so I'm being very cautious here. Yes, there's many should've and could've done that but anyway, past is past. I think based on some distinguishing features with this property (with City and Water view, the rental will guarantee fetch $600+) and rental demands at Rhodes, I'm making this judgement (Merrylands and Rhodes is two completely different areas) and because it's nice to live, I factor that into account too. But again, I'm open for suggestions and opinions. Here to read and learn more really.

That could work too - I hadn't looked at Epping but quick search did give some 2 bedders (even new ones) at around 700k price point. I'll do some more research on the area.

 

Thanks for these - I wasn't exactly sure what figures would be considered a good supply demand market but it definitely looks like Zetland/Rhodes is on the lower end.

Most In-Demand Suburbs Homebuyers And Investors Are Flocking To

I had come across this article and seen few areas like Wollstonecraft and Paddington where I might do some research as well.

Something like this https://www.realestate.com.au/property-apartment-nsw-wollstonecraft-137636038 will probably serve better for investment however wondering if rental demands are also high in these areas too... not really familiar with some of these suburbs.

just FYI - I want to state the only reason why I highlighted this Rhodes apartment is because of the view - I had heard that having a good water view is an important factor in people's decision to rent/live in the area especially given these days, living closely to CBD isn't a thing with people working from home and apartments with views do fetch considerably more than in rental income than those without. Otherwise, people here are all right, Rhodes is not the area to look at for growth opportunity.