2016: New Year, Same Story - An Insight Into Sydney's Market

Market Insights
8 years ago
3 minutes

With the reduction in the first home owners grant, coupled with a level of uncertainty in the marketplace, the demand for rental property is going to begin rising quickly, which is where our smart investors can begin to capitalise.

There are too many doomsayers for Australia’s real estate market, but this thinking is too broad. 2016 promises to be the year of opportunity for astute investors who follow the fundamental rules of wise investments.

I like to follow the contrarian view of property investing which means that while everyone else is panicking, it’s a good time to start buying.

Many of buyers who purchased property in the twelve months following the GFC have enjoyed great gains.

Many of these same buyers have been waiting for these ideal conditions for some time, and they are poised to pounce on opportunities when they present themselves.

Even First Home Buyers will be able to see great returns for 2016, so long as they are willing to compromise.

The number one issue I have with first home buyers in any situation is managing their expectations; they are all looking to purchase a luxury home in the middle of the city, so they inevitably keep chasing the impossible dream whilst prices of properties that they can afford continue to increase.

By the time they realise it, the properties that they could have afforded last year are now outside of their budget. 

Smart first home buyers of 2016 will understand that compromise is a necessity.

I often urge first home buyers to simply make a decision and run with it.  Purchase a property in or adjacent to a suburb you like, build up some equity, then move onto a bigger or better property. There is little doubt that it is better to have your foot on the property ladder than to observe the market’s continual rise from afar. 

My fundamental rules for investing remain as relevant today as ever:

  1. Buy where people want to live – the most popular suburbs are popular for a reason, they provide excellent amenities.
  2. Buy in suburbs adjacent to more affluent suburbs – in these suburbs you are starting from a lower base (i.e. purchase price) and your growth over the next few years will be in line with, or even exceed affluent adjacent suburbs.
  3. Buy in the best suburb you can afford – often it is better to buy a 1 bedroom in a popular inner city suburb, than a 3 bedroom for the same price in an outer suburb. 
  4. Understand the power of leverage – debt is not a dirty word if you use it effectively.  It provides you with opportunities to expand your portfolio and in the current low interest rate environment, can often be your best investment friend.

Suburbs to look out for in 2016:  I have selected the following suburbs based on the fundamentals discussed above:

  1. Inner City: Surry Hills/Darlinghurst
  2. Inner West: Burwood/Ashfield/Campsie
  3. North Shore: Chatswood/Willoughby
  4. North West: Kellyville/North Rocks
  5. West: Bankstown/Liverpool/Greenacre