SYDNEY UNAFFORDABLE, SO WHERE TO NEXT?
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FEATURE ARTICLE
SYDNEY UNAFFORDABLE, SO WHERE TO NEXT?
Sydney is only getting more expensive – so what’s an investor to do?
Sydney’s median house price increased to $1,147,352 in April, tens of thousands of dollars more expensive than just one month prior. While there are signs the surge is slowing, economists still expect prices to continue rising.
This continuing rise has made Sydney an unaffordable investment option for many everyday Australians. Across 8 countries, Sydney has been rated the third most unaffordable city, according to The 2021 Demographia International Housing Affordability report.
Of the major housing markets in the Demographia report, Sydney comes in third last for affordability.
Compared to the high purchase prices in Sydney, the rental yield is low. In fact, house yields are at a record low in Sydney, 3.02% in Q1 of 2021 compared to 3.38% in Q1 of 2020. This poses problems for investors who require cash flow positive or cash flow neutral properties.
Investors then must look beyond the Harbour Bridge. In comparison to Sydney, Brisbane is far more affordable. In March 2021, the median house price in Brisbane was $632,999 versus Sydney’s $1,309,195, according to Domain’s House Price Report.
Not only is Brisbane more affordable – the rental yields are stronger and the population is increasing. The sunshine state gained 30,000 people in 2020. Unlike other capital cities, Brisbane did not have a net loss to regional areas.
Brisbane also showed strong market sentiment. When surveyed, 76% of respondents from Queensland selected the Brisbane market as the best place to invest this year. Meanwhile only 8% of investors believed Sydney showed the greatest potential.
Brisbane presents a unique opportunity, home to locations with strong rental yield and strong forecast capital growth.
In February, Westpac’s chief economist, Bill Evans forecast Brisbane will rise 10% over 2021 and 2022. This echoes earlier predictions, made in October 2020, that Brisbane would skyrocket in value.
Westpac Bank’s forecast in October 2020
To support industry recovery, the Queensland Government has committed to a four-year, $51.8 billion program of works.
With the RBA holding the official interest rate at 0.1%, as of May, now is an excellent time to invest.
When determining your investment strategy, it helps to speak to professionals who have experience and proven results. You can request a free 1 on 1 strategy session with a Senior Property Coach below to discover how you can invest successfully in the current market.