NSW Top suburbs/ideas for property investment

Hello Everyone,

This is my first post and hoping to get some useful pointers/guidance from your experience.
We are looking to purchase an investment property in Sydney - no other city due to personal requirements till $800,000-$850,000 range. I have been reading some posts about people talking about NW Sydney areas with positive and negative thoughts.

I am trying to do some lookups on Investment Property & Suburb Performance Data
to explore suburbs for property investment potential but seems its better idea to also have some feedback from this forum/community.

We are open to welcome your suggestions for IP (in our range).
Appreciate your great help in advance.

TA

 

Hello!
Just wondering, why an IP in Sydney? Most on the forum think the Sydney boom is near peak and it could be turning in the not too distant furure. Of course, if interest rates are cut, there would be more steam, but that's not looking likely. Add in APRA tightening and it's hard to see much more quick capital growth.

To me, the likelihood of a downside or flat market is equal to or greater than the likelihood of upside. Its just not really the right time to leap in imo.

 

Thanks Gockie, one of the main reason we are focusing locally is - our inability to spend time in other city to inspect properties - due to family situation. Plus we feel comfortable to have this IP in same city as we are living.

 

If thats the reason, there are buyers agents who can help you buy interstate. Otherwise, flights are cheap. I just feel if you buy now in Sydney you might see a fall in price or no growth for a long while.

 

I felt like that for years until i realised that it takes very little extra effort to buy interstate. It really doesn't make any difference whether you own an IP next door or a 1000 kilometres away.

Actually one of the worst experiences I ever had as a landlord involved a property just a block from my home in sydney. Due to the proximity, I got overinvoled and then learnt my lesson to leave the issues to the property managers than trying to fix every bulb yourself.

 

Appreciate inputs.
BTW, any stats which can help me to understand this - Sydney you might see a fall in price or no growth for a long while?

And yeah, buyers agents - is good option.
Any specific city (and suburbs in it) I should focus into? Reason for asking is again anything external to Sydney also makes my options too wide . BTW, how much the buyers agents charge?

 

NSW is a big state, with many options, the country is huge, with far more options.

You have to spend a lot of time researching and then deciding whats best for you.

 

Hi @IP2017.
There are charts floating about on the forum. We just know that Sydney's been going up since 2013. Last boom went from the late 1990's to 2003 then it was flat/down (Depending on where in Sydney you look at).
The Sydney market only picked up in 2009 with the end of the FHB grant on any existing property. So there was 5 to 6 years of no growth.

Fast forward to the current day. Interest rates are going up a little. But the most important factor is now is that it's getting harder for investors as APRA is reining in lending. And it won't stop that any time soon. Investors have made up over 50% of the NSW market. Its also harder for international buyers to get funding too so the price of new developed properties will be affected. With decreased buyer activity, prices simply have to come down. Its a good chance for owner occupiers who have been sidelined to finally get into the market and buy. Of course, their home loans are likely to be rather hideous.
In any case, don't expect Sydney home prices to keep growing as they have over that past few years. It's not sustainable.

Where I would consider:
* Brisbane (if you want growth, target houses. General rule of thumb is, inner is better. Look at the thread).
* Check out the larger centres of Tasmania
* Canberra could be ok
* Perhaps Geelong.

No crystal ball... do your own research.
Check out the vacancy rates and rental yields in the areas you are looking to buy. Also how much developable land is nearby (supply of land generally keeps the prices of existing homes down unless there is huge demand or new infrastructure is coming into place.)
And keep asking questions.

 

I think the common thinking for locals regarding the Sydney market right now is that we have hit the peak and probably the market need to wait for another 5-8 years to start peaking again looking back at the history since the 1990s.

However, as a Chinese immigrant myself, i don't think that way. I still have lot of contacts with my friends back in China, if given the opportunity to buy a property in Australia, majority of them would choose to buy in Sydney, some would choose to buy in Melbourne, no one would mention cities like Brisbane, Newcastle, etc.

A lot of people are mentioning how unaffordable properties in Sydney is compare to wages. But in China, this situation is 10 times worse. It would take an average worker almost 70 years working full time to save up for the deposit for an average 2bedroom unit in an average location in Beijing, that's if they don't drink or eat at all in this 70 years. So when they look at properties in Sydney, they think it is really cheap.

Most people should know that the same thing happened to Vancouver, and it is only after Canadian government decides to put a hefty 15% foreign investment tax on the city, the price in Vancouver started to slow down. Immediately, the Chinese buyers shift their attention to Toronto where the tax wasn't in affect.

Now back to Sydney, if the market do slow down, it will start from the areas that's furthest from CBD, areas lack infrastructure, schools. I think it is very safe to invest around Sydney City especially suburbs that are popular to Chinese like Chatswood, Burwood, Strathfield, etc. It is also very safe to invest in surburbs where there are always extremely low stock levels like the lower north shore, Waverton, Wollstonecraft, Mcmahons Point, etc.

I live in Chatswood personally, i have been going out to inspect properties every single weekend around the area. Compare to beginning of this year, one example is an unrenovated 2bed unit around Chatswood Centre was around $950,000 five months ago, now they are selling for $1,250,000+, one just sold for $1,300,000 next to a block of boarding house, completely unrenovated.

I bought a 2bed in Mcmahons Point settled 6 months ago for $1.35mil. Now this entire new year, there have only been three 2bed that was sold in the suburb. Two of which are in the same block as me. One sold for $1.55 and one for $1.9. There is just no stock at all, and demand is really high out there.

So buy in low stock areas and Chinese oriented areas close to Sydney CBD and you will be set.

 

Agreed with what @Gockie said.

We have clients from Sydney who are purchasing in Brisbane with local buyers agents' assistance as they don't have the time to fly, inspect properties, build relationship with local agents. For some it's their first IP.

 

I would encourage the majority of beginners to engage a reputable BA whether interstate or local. To much at stake to get it wrong and plenty of predators out there to help you do so, equally as many if not more good people as well.

 

What if the Australian government implements more stringent measures against foreign residential investment?
I would say this is something that will definitely happen at some stage

So realistically investing in a market that has already seen a lot of influence from overseas investors/ visa seekers would be riskier than investing in a market with no past influence

 

People who dont invest in property think its a great way to make easy money. There are many pitfalls.
One that isnt talked about on here very often is the cost of buying a 'well located, blue chip investment property' at the wrong stage of a cycle.

If you buy an 850k investment property then your up for 900k once stamps and purchasing costs are included.
Whats your rent on this 900k property? $450 per week? Take out PM fee and your at $420
So lets say you get an Interest only loan and your repayments are $803 per week
Insurance, Rates, Water, Maintenance will be approx $4,500 per year or $86 per week

So your income is $420 and your outgoings is $890. So out of pocket $470 per week or $24,400 per year. Less your negative gearing of 35% - then you are $15,886 out of pocket.

If you have 5 years with no growth then you are behind the 8 ball by 15,886 x 5 + purchasing costs of 50k = $129,430

If Principal and interest is paid then add another 40k onto this.

Obviously if you time sydney and melbourne right then you can make quick money but if you time it wrong then your throwing a lot of money away

 

Sydney set to bounce back from year’s weakest auction weekend

Last Saturday Sydney experienced its lowest auction clearance this year. But still, it is higher than this time last year. Also if you look at the graph, regions closer to the city has higher clearance rate compare to outer regions across the board.

The market might slow down a bit for a while because Winter is coming, market usually slows down a bit when it gets cold. When august comes around, market will pick up its pace again. Then when November comes, market slows down again. This is generally the cycle here.

Depends what you want, buying in Sydney for me is always about the capital gain. If i want rental cash flow, i might as well buy a $850k service apartment that gives me a $1000/week net rental guarantee. If that's what you want, i have something in mind for you.

 

Yes its all about the timing

 

pretty much spot on - it is all about timing - (and when) - on a micro level it could be timing of a suburb (with news of infra) - but yes you wouldn't want to be stuck with a lame duck IP not doing much and taking money away.

 

I know a few people who have bought investment properties with huge rezoning potentials. One of them bought a house on 550sqm in Campsie for around $1.2m, currently in R4 land (6 storeys), however it will see significant uplift to a 18-25 storey zoning in the future.

Try looking along the lesser-known rezoning of suburbs from Sydenham to Bankstown; Sydney Metro will heavily revitalise those areas + the draft planning strategy for Sydenham-Bankstown Urban Renewal Corridor is about to be released. Developers are already keen and door knocking.

 

In Brisbane as well. 400k houses with 7 story unit development potential - high density zoning. Neutralish cash flow. Could get the same less than a year ago for 360k odd renting for 400pw.

 

nice nice - not every one can purchase and hold at those levels though in the current market cycle!

the woodies (burwood, chatswood, eastwood) should hold their value well dareisay it "always" as its a different level/demographic of demand underpinning their markets from overseas

 

Yah... Won the lottery here...
Eastwood was not always Chinese but around 30 years ago the Chinese businesses and people started moving in....