Sydney Property Investment Overview

It would seem that the New South Wales and especially the Sydney investment property market is moving into a period of consolidation. This is not seen as a bad thing as property investment historically goes through cycles.

Property Investment and capital growth tend to increase in areas with significant infrastructure developments. Investors considering the Sydney property market need to carefully ensure that the planned infrastructure developments are delivered by the government in order to expect any significant capital growth on their investment property.

Supply of housing in the Sydney property market remains a challenge with underlying demand heavily outweighing the completion rate of new homes for Sydney investment properties and new home buyers. Rental demand remains very strong and things are not expected to improve for renters during 2012 and beyond.

Sydney property is very much a fragmented market. However, buoyed by strong international migration and reduced net interstate outflows, underlying housing demand is running well ahead of new housing supply and this gap is expected to widen in the years ahead. The population of NSW has grown consistently over the past decade but the rate of home building has failed to keep pace. Based on population and demographic projections prepared by the ABS (Australian Bureau of Statistics), the Housing Industry of Australia (HIA) estimates that NSW will be home to an additional 412,300 households by 2020.

In choosing the right suburb for property investment in Sydney, if possible, invest within 15km of the CBD, or within 3km of suburban business hubs such as North Ryde and Parramatta. As always proximity to infrastructure is important, this encompasses employment, shops, cafes and transport. Investors can do well but they have to be very careful, do your homework and be aware that the market is patchy, the area where you invest is crucially important.

The issue in New South Wales is the land tax and stamp duty which adds considerably to the purchase price. Excessive infrastructure charges continue to weigh on New South Wales home building activity and dwelling starts are reported to be below the long term average. As per mentioned above, rental demand remains very strong due to population growth and under supply.

Sydney is the most expensive property market in Australia. The relatively lower investment levels in Brisbane and Melbourne with higher relative returns, continue to make them much more attractive propositions for investors. In other words, you get much better value closer to the CBD for the same investment amount in the Brisbane and Melbourne investment property markets.

Further information on property investment in Sydney is available in our free information pack

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