Sydney no longer top spot for property investors

Property investors may be better off turning their sights to other capital cities in Australia, as the Sydney property market cools and short-term growth prospects wane, according to a new report from Momentum Wealth.

Sydney’s median house price is now around $880,000 — a 46.7% increase since the beginning of the housing market's upswing in January 2012. But the report, which analysed key demand and supply indicators in the city found that Sydney’s days as the number one property hotspot are numbered.

“While it’s impossible to predict how much longer Sydney’s upcycle will continue, our research report highlights an easing in several key market indicators suggesting the strongest capital growth in the current upcycle has passed,” said Momentum Wealth managing director Damian Collins.

Properties are now taking longer to sell, they’re selling less and there is a well-documented apartment oversupply problem in the city. Dwelling approvals have also plateaued, all suggesting that the property market boom in Sydney is slowing.

Some buyers are also simply being priced out of the market, thanks to the city’s affordability issues.

“While the long-term outlook for the Sydney property market remains positive, the short-to-medium term view isn’t as rosy,” Collins said.

“The research report explains that investors considering the Sydney market are likely to be better off looking at other Australian capital cities that are earlier in their growth cycle, are more affordable and offer higher yields.”

He said that buying at the peak of a market upcycle can be detrimental to investors financially when the market experiences the ensuing downturn, as it is expected Sydney soon will.

“While Sydney’s time will come again, for the time being better investments can be made elsewhere,” he said.

If you’re an investor heading out to snap up a property in an Aussie capital city, head over to our investment loan comparison table to find a way to make it happen.


* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.