NSW Where would you buy in NSW with a budget of $700k-$800k

Hi everyone, we are thinking to buy an IP - house in NSW, either in Sydney or not too far from Sydney, we target capital growth but also need decent cash flow to help paying the mortgage interest. Our budget is around $700k-$800k, we like land size to be over 650sqm as we want to put a GF in. With the budget where would you invest in and why?

1. Southwest Sydney near the new airport such as Campbeltown area
2. Central Coast
3. Lake Macquarie
4. Newcastle
5. Wollongong

Any opinions and suggestions are welcome!

 

Orange, NSW.

Budget be damned (you could probably do it for $200-300k under your given budget), but land size and granny flat potential; as well as cashflow - all falls within your criteria - don't know definitively about capital growth - we can all just offer our best guesses unless someone identifies as a time traveller and can offer you proof they've travelled back from the future.

 

I vote Newcastle but not sure whether you could still get that land size in traditional CG suburbs

 

Hi @SJ&L,

St Marys and Blacktown are two areas not in your poll that you could consider.

St Marys

• If you want to capitalise on the new airport, this suburb will be the terminal to Sydney Metro - Western Sydney Airport and connect this metro to the existing rail network
• In terms of public transport, there are 48min express trains to Central and is 10km closer to the CBD than Campbelltown driving distance
• It will be a stretch to purchase an IP within your budget for land size >650sqm here which is why I would recommend the neighbouring suburbs such as Mount Druitt and its satellite suburbs of Tregear, Emerton, Lethbridge Park and Whalan. Here you will comfortably meet your budget, land size and house in Sydney criteria

Blacktown

• I like this suburb for its strategic location. It's home to a hospital, sizeable shopping centre and town centre and it's where two rail lines meet. The Hills region is not far from here so strong capital growth in the Hills put pressure on suburbs like this (however you could probably say this about any suburb)
• It is closer to the CBD and has peak hour express trains as fast as 34 mins. It will also be several stops from the new Sydney Metro West rail terminating at Westmead
• Again, finding an IP that meets all your criteria may be a stretch here so I will recommend checking out the neighbouring Lalor Park. There is a sizeable price difference between Lalor Park and Kings Langley so this might be something you can capitalise on

Sadleir and Cartwright near Liverpool may also fit your criteria and be worth checking out. Like Mount Druitt, they are public housing communities though the government may have sold a lot off.

Hope this gives you some ideas as to where you can look or what to think about when looking for your IP.

Cheers,
Henry

 

Thank you for your reply, we may think about Orange too, only problem is it's too far for us and hence hard to do weekend inspections...

 

This is an issue we also found. There’s limited stock at the moment too.

 

Thank you!

Thank you Henry for your detailed reply and helping us to have more ideas. I just checked those neighboring suburbs you mentioned (I haven't heard all of them before), I noticed they all have over 50% of renters, so I assume they all have quite a bit of public housing. Traditionally people say a suburb with 30% or less renters are good suburbs as they appeal to owner occupiers, and thus they can achieve higher CG. So what's your opinion on those suburbs with over 50% of renters?

I have read some posts in this forum that people saying investing in suburbs with many public housing is actually good, as the government selling off the public housing, the property price will go up in a faster speed. But is there a way to find out what the plan of the government is for each suburb's public housing? Otherwise it feels a bit like gambling...hoping the government would do something to my suburb but in reality it may take too long?

 

Thank you!

 

I was in Orange last month and I have to be honest... there is not much going on here. It is a small town with a tiny shopping center you can walk start to finish in 10 minutes. Winery is ok but nothing exceptional. Restaurants ok but noting exceptional. Not sure when you can see capital growth but once it’s core industry finishes the place might suffer.

 

As for capital growth; I would pay you a million dollars if you could accurately predict capital growth of all cities and suburbs of interest. The issue is, we could all take our best guesses, and most of that is based on past performance being indicative of future performance.

Expert Bust #10 - High Past Growth is a Red Flag

Datageek's post on this topic is poignant in stating why that may not be the case; as the data indicates the opposite to be true. High growth in the immediate past is predictive of lower than average growth in the coming near future.

 

Agreed. That's when we see undervalued suburbs catch up in price, and hot suburbs have price corrections. But I am not sure if this is still true for suburbs with not so good demographics etc, I wonder if they would ever achieve high growth if nothing changes within those suburbs.

 

A question to ask yourself is...but what choice do you have? Where can you purchase a >650sqm property in Sydney with <30% renters and have high owner occupier appeal? Maybe the answer is outside of Sydney and that's the compromise you'll be willing to make.

Yes people like to purchase in areas with owner occupier appeal however that's often reflected in the price. Whether it leads to outperformance in CG depends on a whole range of factors that identify it's relative value and price. If you look at the last boom in Sydney, many high renter/public housing suburbs have seen significant price growth broadly in line with suburbs with low renters/public housing.

In regards to public housing, anyone can have any opinion positive and negative regarding...well...everything. For example:

• Public housing neighbourhoods are great because they have greater potential to gentrify VS public housing neighbourhoods are terrible, there is not aspirational suburbs and have no owner occupier appeal
• Property on main roads are terrible because they're noisy and dusty VS I can see future development potential in this property on the main road

These are very simplistic examples but there are two sides to every coin. I'm more interested in the price to determine if it has value. As Warren Buffett mentions "Price is what you pay. Value is what you get."

To find value, shortlist suburbs that meet your criteria, then list all the pros and cons of that suburb which may include rental statistics, public housing, price discrepancy to neighbouring suburbs, proximity from amenities/jobs, whether you're comfortable with the distance from you...etc. Historical price growth as @Onyx_OCAU pointed out is an important factor for comparing value in your suburbs of consideration.

Good luck with your search!

Henry

 

You are right Henry, it's true every coin has two sides. I have been educated to go for suburbs attractive for owner occupiers, but later I heard stories about people getting good CG in less desired suburbs. And of course there are people didn't do quite well in either approach. Property investment is never that straight forward and no one can copy other people's success.

 

I’m a Hunter Valley local and voted Newcastle. Check out the Newcastle 2021 thread

 

Thank you! And how's Hunter Valley region going by the way? Any development happening?

 

Hunter Valley house prices are benefiting from the flow on effect of big increase in Newcastle.

Major developments in Hunter Valley recent years probably limited to East Maitland with Greenhills shopping centre expanding and new hospital.

New gas power plant just announced in Kurri.

Lots of house and land developments in and around maitland.

Newcastle is more the area booming with developments such as foreshore redevelopment, uni campus in town and countless residential apartment developments.

 

Hello Henry or anyone that's interested in my post, what's your opinion on nearby suburbs of Blacktown, such as Doonside and Rooty Hill?

 

Traditional rough neck areas. Has improved over the years but still has that stigma attached. Not as bad as some areas of Mt Druitt lol so you haven’t scraped the bottom of the barrell lol.

Along with rest of Sydney, house prices out there are eye bogglingly high.