The Sydney housing market in 2017 remains among Australia’s strongest. In recent years, Sydney has seen the greatest increases in housing prices out of any Australian city by a substantial margin. The population of Sydney has also grown steadily over the past decade, yet housing undersupply is well documented – two key factors that are contributing to long-term price increases in property.
Much of the development which is currently planned or in place is located established suburbs, with a large number near the CBD. These are prime locations, closed to amenities, transport and infrastructure and are geared towards long-term growth.
New road infrastructure and transport developments are contributing to the rapid rise of new suburbs and population shifts meaning there is scope for investment in a number of exciting up-and-coming locations.
All of these factors point towards a city that is ripe for investment, but not all opportunities are equal, some areas may outperform, even as the wider market stagnates, or even weakens, so finding those areas which will still see strong rental demand and long term capital growth is critical.
There are three key categories that dictate what makes a good investment property in Australia:
The Location – Location is a crucial element in a property’s value. This includes proximity to schools, public transport, parks, libraries, hospitals, shops, cafes and beaches etc. Acquiring property based on location requires a degree of insight and foresight. For example, scoping out growing populations and development of infrastructure, not basing your choices on volatile industries and being aware of proximity to cultural or financial hubs.
The Property – The property itself is, of course, another major factor. A good investment is choosing a property that will always be in demand. This may be influenced by something like the age demographic of an area, as property becomes relatively more expensive floorspace can be one of the first things a builder may compromise on, so looking for strong floor plans, or buildings which offer strong tenant facilities such as private dining rooms, private pool cabanas or well-equipped gyms and pools can help to set your property apart.
The Market – Researching the market is a crucial part of choosing the right investment property. This includes exploring data on current and historical sales and discovering trends and patterns in the market
Investing in property is all to do with long-term capital growth, so thoroughly researching the market and investigating different locations in Sydney is hugely important. Investing in new property also has number of unique advantages over investing in older properties which contribute to building a robust portfolio for the long term.
Having a keen eye for up-and-coming suburbs and locations that are likely to perform well is hugely important in making a lucrative investment. Suburbs within 10-12 km of the CBD, that are close to water and other cultural attractions, and that have scarcity value (value based on relatively low supply) are likely to provide long-term capital growth.
The internet provides a wealth of information for potential property investors. Looking at historical data and current sales results can help give you a good grasp of trends and patterns in the market.
These are few websites which can be very helpful:
• Real Estate Institute of NSW – Each state in Australia has its own real estate institute which provides market commentary as well as median sale prices and other market data.
• Residex – Residex is an award-winning property data resource for banking and finance industries, property professionals, investors and homeowners providing market and suburb reports, predictions, rent reports and much more.
• PropertyDATA.com.au – PropertyDATA provides analytical data collected by the real estate institutes and is widely trusted by banks, real estate agents, valuers and investors alike; an excellent research tool.
• JLL – JLL provides property research and market reports for residential, industrial and commercial properties.
Getting your hands on a current copy of Your Investment Property magazine (or similar) is a great resource. Personally I disregard the first half as they highlight the investment flavour of the minute, and head to the back of the magazine. Their state by state analysis of the market is a great place to start.
Property investment involves long-term strategy and navigating the Sydney market will mean considering a number of different factors. As we’ve mentioned before, working closely with your team, in particular your property strategist to explore different locations’ potential for growth, is very important.
Your strategist will be able to advise you on where the golden suburbs may be found, which suburbs have had previous capital gains, and disparities in rental returns amongst different locations, as well as what is best for diversity within your own portfolio. They maybe also able to advise you on plans for infrastructure, facilities and cultural attractions in a suburb with will greatly contribute to its future growth.
If you have any questions regarding property investment in Sydney, please feel free to get in touch. We’d love to provide strategic advice to help you achieve your goals!