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Two propositions - Syd unit vs Bne H

Discussion in 'General Property Chat' started by zlatan9, 30th Aug, 2016.

  1. zlatan9

    zlatan9 Well-Known Member

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    So I'm currently considering two quite separate propositions - all based around a price of around $600-$800K:

    (1) Sydney 1 bedroom inner city apartment; or
    (2) Brisbane 3/4 bedroom house on the southside.

    I put together a quick comparative analysis from realestate dot com and this was the result:

    Screen Shot 2016-08-30 at 1.32.08 AM.png

    Although all you get is a tiny cell in a Sydney 1 bedroom unit, the numbers certainly look more attractive.

    Any thoughts on which is the better bet and why?
     
  2. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Hmmm.... I think both are good.... I have a 1 bedder near Sydney CBD and I may be able to sell it with a 20% gain since purchase in late 2014 and I get roughly 7.1% yield on a current sale price too as I'm Airbnbing it.
    Perhaps if you buy in Sydney don't buy in a mega complex. And get one that includes a carspace and is not a serviced apartment, and ideally has 50sqm of living space (though anything with at least 40sqm may be considered). Anything smaller then you probably can't get higher LVRs on it. Check the strata report and strata levies too - I would cross out anything with over $1000 of strata levies per quarter. Do all of this and it will help narrow down your choices.

    On the other hand, near city Brisbane houses may go up in value more than a Sydney 1br unit. Maybe buy one with some sort of potential (create 2 more bedrooms?) No crystal ball here though but owning land near the city seems like a safe bet. For Brisbane, check the flood zones. And council rates etc. Seem higher in Brisbane for investors.... it feels that way anyway.
    If you can buy 1 of each... sweet as bro.
     
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  3. Tonibell

    Tonibell Well-Known Member

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    Past performance is not a reasonable predictor of future performance.

    There is a lot more to consider than just the figures you have put up.

    I would be going for something with land content in The Brisbane middle ring of suburbs - Sydney cannot continue to achieve those growth rates for much longer, but Brisbane might.
     
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  4. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Just more thought.... I reckon houses in the area of Brisbane you are targetting will get to $1mil well before the 1br apartments in Sydney will. They could get there in say 4 years. But it will probably take quite a bit longer for the Sydney 1br apartment. Sydney apartments may have better yield... both have highish/comparable ongoing expenses.

    I think house on land in that part of Brissie has more upside overall though. :)
     
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    What has driven the growth in those Sydney units? What was in the sample used? Has the growth been skewed by a large numbers of new units on the market vs resale of older units? How big was the sample? ie 7% growth in inner Sydney may not be sustainable/has Sydney done its growth?

    Will Brisbane hit $1m in 4 years? How long will it stagnate at that level while other markets move (look at the long term price movements for Bris).
     
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  6. zlatan9

    zlatan9 Well-Known Member

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    I sure that's the same question everyone's asking!:) I've lived in one of these inner city 1 bedders for four years and I still can't see the attraction with them. I'm constantly saying I should stop paying the ridiculously high rents and move away (and I finally did so a few months ago). Yet, the numbers don't lie - I've seen the flat increase in value over that time notwithstanding the strata and building problems I see firsthand as a tenant that prospective buyers do not. At the end of the day though, numbers don't lie. But yes, how long can it continue?
     
  7. meme plecko

    meme plecko Well-Known Member

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    See if you can find data prior to 2011. Your growth % comparison would look very different then compared to now. Since then, Sydney boomed across the board, Brisbane fell due to floods etc, only just recovered to get back to where it was at the last peak. Hence your data shows larger % growth for Sydney one bedders compared to Brisbane houses. Ask yourself if Sydney will continue to grow at 7% per year? Or, is Brisbane going to catch up? Project your estimates to say 2021. Which one is performing better on paper?

    Imagine the worst case scenario, zero growth for Sydney and Brisbane properties over the next 10 years (unlikely, I know). Can you do anything to your IPs to manufacture growth? If you buy well (zoning), you could replace your Brisbane house with say three townhouses, maybe make some money that way. It's near impossible to split your one bed apartment to two studios, or convert to a two bedder...
     
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  8. HUGH72

    HUGH72 Well-Known Member

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    Screenshot_2016-08-30-11-39-35.png

    This the 5 year chart for Sunnybank and Macgregor, they look more like a graph for a Sydney suburb. Yields are now low here, I think they might be due for a pause and I think recent growth has shown a slowing trend.

    Long term they are likely to continue to outperform as have Asian driven suburbs in other capitals but they look expensive IMO.

    I could be wrong as they have continued to grow but surrounding suburbs look better value. Next leg up might not be until some of these suburbs are rezoned for more higher density living.
    Screenshot_2016-08-30-16-56-47.png
    I can't really comment on the Sydney suburbs.
     
  9. MTR

    MTR Well-Known Member Premium Member

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    Neither, Melb will outperform both
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Vested interest or wishful thinking @MTR
     
  11. MTR

    MTR Well-Known Member Premium Member

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    what am I selling:eek:... LOL.. the gloves are off, lets review markets in December and let the numbers talk for themselves.
     
    Last edited: 30th Aug, 2016
  12. Speede

    Speede Well-Known Member

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    Google Armchair Expert
    3rd partayyy!
     
  13. HUGH72

    HUGH72 Well-Known Member

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    Screenshot_2016-08-30-21-59-08.png
    This suburb might have a bit more short term growth left though.
     
  14. zlatan9

    zlatan9 Well-Known Member

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    [QUOTE="
    This suburb might have a bit more short term growth left though.[/QUOTE]

    Curious to know what factors lead you to say so?
     
  15. bythebay

    bythebay Well-Known Member

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    What about a house in Western Sydney for 650 and spend 120k to chuck a granny flat in the backyard
     
  16. zlatan9

    zlatan9 Well-Known Member

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    I'd like to say it's because I know the two areas I've been looking at as I've lived in the area but having literally just listened to an Everyday Property Investing podcast where Jane Slack-Smith was the guest, I realised I don't actually know my area because although I have lived for a long time in both areas, I don't actually know the median price, the demographics, the percentage of owner occupy / renters etc etc.

    These are also the two areas I could choose to live in for the initial 6 months (for CG exemption purposes).

    So perhaps looking outside these areas might be an option as I learn more about investing but I'm keen to investigate viability of these two options at the moment before thinking of other locations. To be honest, I'm leaning towards the house and land option as somehow it "feels" safer for CG than a 50sq m shoebox (despite what the last 12 months growth number shows).

    Hopefully, by buying below market value that protects the downside but that's obviously not an easy thing to do and after a week of trawling through the forums and trying to learn as much as I can, I still haven't worked out how to know the value of a property - comparable sales haven't worked because I still can't judge the differences in what is comparable (or it could just be that sold prices are not consistent). Tempted to go with a buyer's agent instead.