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A Slower Market is Still an Investment Opportunity


12/03/2018

For the past 5 years, Sydney property prices have been steadily increasing, making it one of the most expensive places in the world to live. The Sydney property market is now slowing for various reasons, including tighter credit policies focused on investment, and interest-only lending. Although there is a decline, the City still presents abundant investment opportunities. For reasons ranging from economic factors such as low unemployment rates, to political factors such as embracing government support, Sydney still ranks as one of Australia’s, and the world’s, most propitious cities.

5 Reasons Why Sydney Is Still Strong For Investment

Population Growth

Sydney’s economy has been consistent throughout the years bringing more jobs and population growth, and in turn, stimulating the property market. According to industry sources, Greater Sydney is set to increase by more than 1.5 million people in just over 20 years. This rise in population has brought about a strong demand for property, evident in the development of “mini cities” such as Parramatta, which is heading towards becoming Sydney’s second Central Business District.

Strong Tenant Demand

To cater for the increase in population, Sydney has experienced a boom in the development of apartment blocks. The overall rental market has grown by 2.5% in 2016-2017. This is advantageous for buyers, tenants, local Sydneysiders, expatriates,  investors and many more stakeholders. From an investment perspective, rental returns yield steady income; and from a tenant’s perspective, there is no shortage of available apartments. Whether short-term, temporary or long-term, tenant demand remains at a peak.

Alternate Dwelling Options

In the past, a large house on a large block of land was almost guaranteed success in the Sydney property market. This is no longer the case as medium density housing options such as townhouses and dual occupancies are becoming increasingly popular. Dual occupancies are popular amongst investors as the property style allows the purchasing of one block of land to acquire two income streams. Dual occupancies maximise the potential of the land by delivering superior cash flow, allowing the investor to pay off their mortgage at a faster rate. With growing governmental support, such as the Medium Density Housing Code, state representatives are demonstrating their ability to respond to market demand and changing consumer preferences. These dwelling options serve as an additional property opportunity in Sydney.

Location, Transportation and Getting Around

With great educational facilities, iconic landmarks, great shopping destinations and a richly diverse population, Sydney is one of the most desirable cities to live in. The NSW Government has invested $20 billion in new infrastructure across the state including the development of WestConnex, Sydney Light Rail and Western Sydney Airport located in Badgerys Creek. The expansion of these projects will open the property market to areas that were previously difficult to access through public transport, making them even more accessible. With the ease of transportation being another contributing factor to the appeal of Sydney, the City’s infrastructure has provided convenience to the community, no matter where they are travelling from.

Strong Capital Growth

When considering purchasing a property for investment, it is favourable if the area has a history of strong capital growth and is projected to continue to grow in the future. Factors that can influence capital growth include demographics and levels of disposable income. Generally, inner and middle ring suburbs of the capital cities see long term increases in property value as they are close to employment hubs and offer a convenient city lifestyle. Within close proximity to the Sydney CBD and Parramatta CBD, the region and its outskirts possess abundant opportunities for potential capital growth and property portfolios of investors.  

With years of experience in the industry, we have encountered many spikes, declines, plateaus and more in the property industry. Through the boom Sydney has successfully lived through, we have also witnessed shifts and trends in the market. These range from the types of developments that are in demand; changes in consumer preferences; market influences; mega shifts in infrastructure and technology; and the rapid evolution of the city.  Although current and forecasted industry figures may not be sitting at their prime, the Sydney landscape remains rich and plentiful in opportunity. For the reasons discussed in this article and more, as an investment haven, Sydney continues to offer security, stability and possibility.

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