Nathan Birch shares his 2015 property market update.
SYDNEY: OPPORTUNITIES ARE STILL AVAILABLE
There are still opportunities in the Sydney market. Western Sydney is seeing increased prices with ex-commission housing selling for around $500,000, making it an expensive market at the moment. There are other good value opportunities, however, in Sydney and surrounding suburbs, with two bedroom units selling for around $350,000.
FOCUS ON STRONG FOUNDATIONS
Sydney properties would struggle to gain anything better than a 5% yield in the current market. While there are other opportunities that may be considered, such as granny flats for example, these are not necessarily the right thing to do for a growing portfolio. The Sydney market as a whole is quite hot, so any purchases should meet basic core criteria to even be considered. To benefit a portfolio, investments should be below market value, have an upside for growth and have good cash flow.
BUY WITH CAUTION
It is still possible to get into the market in the current climate. It just takes baby steps through the purchase of a couple of foundation investments to get things rolling. Now is not the time to get a $1 – $1.5 million mortgage for a property, as people can over leverage. While there isn’t a ‘bubble’, investors should be buying with caution and making educated decisions without getting caught out by emotion and paying too much.
BRISBANE & GOLD COAST: THE MARKET IS HEATING UP
There is a lot of action happening in Brisbane and the Gold Coast. Properties are being sold as soon as they hit the market often above asking price and there are a lot of buyers around. South of Brisbane through to Tweed Heads is reflective of the Sydney property market three years ago. Activity is festering, and it hasn’t exploded yet, resulting in some good investment opportunities. There are still good rental returns and neutral cash flow opportunities, but the market is tightening up.
QUEENSLAND: ACTIVITY IS INCREASING
The Sunshine Coast market is seeing very little activity so there are opportunities to be discovered there. Higher up, the market is very active, and is set to go up further in the not too distant future.
MELBOURNE: LOTS OF ACTIVITY
The Melbourne market is looking very much like Sydney. There is lots of activity, with some value areas becoming apparent.
RENTAL CHANGES IN SYDNEY
Rents in Sydney are changing. Stock is drying up, home prices are going up, yields are low and rents are being pushed up by owners, moving toward a potential rental boom. Rentals are beginning to rise, however, not all agents are achieving the same rents so it pays to look around and ensure you have the right agents to maximise returns.
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