Sydney – it sure has been in the property headlines plenty.
That’s not surprising when you consider its property prices have surged over the past five years.
In fact, Sydney house values have increased an eye-watering 75 per cent since 2012, with units not far behind.
By September 2017 that rate of growth had waned – as it needed too – but would-be homeowners and investors are still left with prices closer to $1 million than $500,000.
So with this recent history in mind, the question remains: what are the best suburbs to invest in Sydney?
Where to look depends on what you’re looking for
Like with all investments, knowing which suburbs are the best to buy in depends on your strategy as well as what type of buyer you are and your budget.
For first homebuyers hoping to buy in Sydney, the biggest problem is saving the deposit, though recent stamp duty concessions by the NSW Government will at least reduce that financial burden somewhat.
Western Sydney remains on the radar of many first homebuyers and investors alike, given house prices are lower.
Closer to the city, investment grade apartments remain in strong demand given their location and comparatively lower buy-in prices than houses.
It’s important to understand that while the Sydney market is moderating, there is unlikely to be big price falls given it’s our most populous city, as well as the engine room of our economy.
That means if you’re hoping for a big crash to make prices “affordable” you’ll be waiting forever.
The best Sydney suburbs are resilient in a changing market
When it comes to investing in property in Sydney – or any other major capital city – the suburbs that are the most desirable are those that remain the most resilient in all market conditions.
The problem is that these types of suburbs are generally the ones closest to the city or near the ocean, which in turn attract high prices because of more demand from buyers than supply.
While we are seeing some reduction in auction clearance rates in Sydney, a result in the high 60s is still impressive, which means that activity in the best suburbs remains robust and will continue to be so.
That’s because these inner- and middle-ring suburbs generally attract cashed-up owner occupiers who are prepared to pay a premium to live in those locations.
For advanced investors, these are the types of suburbs where you’re likely to get the best capital growth over the long-term, but you’ll have to forgo yield given the high prices.
At the end of the day, wealth creation is about capital growth, but you must also have the cash flow to sustain any shortfall between rents and mortgage repayments to hold for the length of time it takes for the magic of compounding interest to work.
Your loan borrowing capacity matters, too
Investing in the Sydney market remains a sound strategy – as long as you’re prepared to hold for a long time.
If you’re not, you’re a speculator, not an investor.
Every market goes through a cycle with prices going up and maybe down for a little bit, but generally speaking property prices in Australia have always gone in just one direction – up.
So the best investment suburbs in Sydney are the ones in which you can afford to buy.
And this is the principal difference between new and existing investors.
More advanced investors, who have a portfolio of properties already, most likely have access to equity which can help them purchase a property in one of Sydney’s best suburbs.
New investors, however, may have to lower their expectations and accept that their first Sydney property is unlikely to be a two-bedroom Art Deco unit overlooking the ocean in Bondi.
Perhaps, in 10 years’ time when they have a few properties under their belt, they can afford to buy in that location.
The key is to buy in the best Sydney location that you can afford and for newbies that may mean buying a unit instead of a house because of home loan affordability constraints.
Who should you trust with your Sydney investment loan?
When it comes to Sydney investment loans, it’s important that you can afford the repayments now and in the years ahead as interest rates rise.
So, investing in property in Sydney still makes good financial sense – as long as you can afford to hold the property for the long-term.
The world of banking and finance can be a pretty daunting one for both novice and sophisticated investors and since our establishment in 2002 we’ve focused on providing outstanding service and business standards.
This approach was vindicated when we were named Victoria’s favourite mortgage broker at the Investors Choice Awards.
So, if you would like to find out more on the best suburbs to invest in Sydney, why not contact Intuitive Finance today to ensure you have the right information and expert support on your side from the very beginning?
If you’d like an expert to provide you with insights on the Sydney market or if you have any other questions, please just contact us directly and we’ll be in touch.
The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.