NSW Parramatta 2 Bedder for Investment

Looking for an investment opportunity in Sydney, price range under 500K. Have been tracking Parra for few weeks and prices have come down significantly, which I see both as an opportunity to get in at reasonable price with potential of CG and a risk with new unit coming online in next few months.

1. Second CBD, Central location and lot of infrastructure development especially with Norwest Rail Link, second airport all having positive impact on Parramatta
2. Anything closer to $450K is a very attractive price point.
3. Rental will suffer in short term however I am chasing cash neutral property with positive CG
4. Walking distance to train station, low strata. Dont want swimming pool, lift etc.

Any pointers would be appreciated.

 

One of the first things I do when doing my DD on a property or suburb is check the supply/demand.

If you look at the number of units (not houses or townhouses) in Parramatta (not even neighbouring suburbs of NP, Westmead, Northmead, etc) you will see there are 320 units available for rent. I know Parra is a large area but that's a huge number not to mention the number of units currently under construction.

Although the purchase price may be good - this part of the equation does personally turn me off.

 

I wouldn't be buying in sydney at the moment , but out there , I often check out westmead . Walk ups near the hospital , lots of potential renters with hospital and TAFE's and not aware there's an oversupply , though do you're own DD .

We've never bought there but have considered it in the last few years .

I'd be wary about Parramatta re oversupply and lots of units being marketed to OS investors . Might be some pain around in the next couple of years .

Cliff

 

Thanks

 

Parramatta, home to Sydney's 2nd biggest CBD, is certainly the heart of Sydney's western suburbs, where 44% of Sydney siders live. Not everyone can afford the substantially larger entry level unit prices closer to the city Solid spacious well-located sub $500K units are harder to find but they are out there, if you search hard enough and do your homework with agents.

We've bought for many many investors and home buyers in Parra and surrounds over the past 14 years and it remains popular due to affordability and transport link convenience (though securing a unit with parking is still recommended). Increasing population forecasts and a solid array of amenities such as hospitals, unis, arts, history, parks etc nearby also make it appealing for FHBs and families wanting to buy first time property.

What's tougher is the current rental environment, which clearly favours tenants, with vacancy rates on the up (3.5-4% across many suburbs both west, middle and inner ring) and with several new developments yet to hit the market, tenants retain the upper hand. Having said that, it's imperative to keep in mind that gross yields are close enough to interest rates to still make investment viable. We're finding 3.5-4.3% yields equated with 4% IRs are sufficient enough for investors to manage their cashflow here. What's tougher right now is securing the finance

 

Gross yields of 3.5%-4.3% don't mean anything when you factor in strata costs. Units need to have much higher yields for them to be worthwhile. Besides, Sydney is going nowhere this year. So 2020 might be the time to reassess and see what the market is doing.

 

Hi @Singhalyash
Habe you resesrched nsw and vic cbd apartments from last 10 year's growth.

Your yields might improve and you might have no growth in foreseeable period due to product selection, time of purchase and location.

You might have to redefine your goals or asset selection criteria.

Regards

 

I have friend who's son picked up one for 460k in North Pazza...walk to Church Street...good value but I can't see much growth. Finding stuff is much easier due to the supply.....even if it is listed at 500k...offer mid fours........you need to have a thick skin....

 

Thank you everyone for your insight. I agree that Parra may not have hit bottom yet especially with all OTP settlement yet to happen. On the same note, I am totally confused which areas in Sydney to focus on (@ashish1137 prefer to invest in Sydney)! At one stage was looking at Sydney CBD, prices are trending downwards which translate into opportunities. Not sure though of studio or 1 bedder wwould be a good investment in CBD? On the other hand, stretched between common sense of owning house to picking unit in or near CBD.

 

That statement tells me you haven’t done as much research as you think you have.

Property isn’t like the share market, you can’t track it for a few weeks and see fluctuations.

 

Fair enough, have just started the process and with my limited knowledge, just finding it very hard to shortlist few areas. Parra seemed natural choice, so have been tacking it for few weeks, having said that plan is to watch market and shortlist suburbs for few months before taking the plunge.

 

And in the last two weeks you have watched it tracking down?

 

No, prices from 2 years ago when we were looking at buying in Parra to prices I see now.