September 2013 - Sydney Markets Set to Shine!
By Rich Harvey, Managing Director propertybuyer
Welcome to your September propertybuyer market update.
In this edition we will look at;
- Sydney Markets Set to Shine!
- Seminar - Value Adding Strategies for Profit & Cashflow
- Client Stories
1. Sydney Markets Set to Shine!
The Sydney market is on a definite growth path over the next few years. It is not at boom status but is likely to show considerable capital growth over the short to medium term.
Many of the elements are now in place for a sustainable price growth. Sydney has been languishing for many years so it’s about time it was leader of the pack! Buying into a rising Sydney market will pay handsome dividends to savvy buyers, but beware - not all suburbs will perform equally. You need to know where to buy and which areas to avoid. Our team of specialist buyers agents can help you select the best areas according your budget and needs.
Interest rates are at historic lows. The cash rate is at 2.5% which means mortgage rates are at their lowest level in years. Because borrowing has become more affordable, both investors and home buyers looking to upgrade are re-entering the market. As more buyers enter the market the competition will become stronger and push prices up. Many long term investors have been sitting on their hands for some time waiting for some positive property news. Mortgages have been paid down, savings are up and buyers are primed for action. The key lesson here is to get into a rising property market earlier than later. The market is not likely to peak in Sydney for some years so the talk of bubbles and missing the boat are all myths.
Chronic under-supply is a major factor at play in the Sydney market. Leading economic forecasters BIS Shrapnel point to an ongoing and sizable deficiency in property supply in Sydney. The most recent figures from ANZ Economics show that Australia-wide we are currently showing a shortage of around 300,000 dwellings. In NSW the shortage is estimated at 82,000 dwellings (but we are currently only building around 28,000 pa). Sydney will continue to struggle to meet demand because developer charges are very high for new greenfield projects, limited availability of land and our planning system makes it inherently difficult for projects to be assessed quickly.
Sydney auction clearance rates have been at record levels this year – last weekend saw an incredible 84% clearance rate. This is a clear indicator of a strong and healthy market. The July average was 76%. Buying at auction is a definite gamble in this market. The outcome is very uncertain and it would be very easy for many buyers to get swept up in the emotion of the moment and over-pay.
Vacancy rates in Sydney are also remaining fairly tight according to the latest survey by the Real Estate Institute of NSW (REINSW). The inner and middle ring suburbs have a vacancy rate of just 1.9% while the outer suburbs show a vacancy rate of 2.3%.
Stock levels are a major issue for buyers as there is limited supply. Typically the Spring season sees a flood of new listings coming on the market but compared to the same time last year there is 17% less stock on market than anticipated. This is creating intense competition amongst agents for new listings and for buyers trying to get a foothold in the market. With limited stock the average days on market has reduced from 91 days (12 months ago) to 72 days (according to Australian Property Monitors).
SQM Research is predicting property prices to rise in Sydney by as much as 15% to 20% according to recent “Housing Boom and Bust Report for 2014.” I believe a rise of 20% pa is unlikely because wages growth will not keep pace with house price growth. Low interest rates will make residential investment very attractive over the next 5 years. Other major macro-economic drivers for capital growth include the SMSF sector moving into residential property and the massive build-up of cash deposits (looking for higher yields) in the Australian economy.
On balance, I believe we are likely to see a capital growth rate in Sydney around 8% to 10% in the next 12 months. The biggest mistakes in real estate can be made in a rising market with growing positive sentiment. Emotional decision making can take over when negotiating and we have seen buyers pay silly prices. As independent Buyers Agents, we assess the true long term value of properties for our clients and give advice without fear or favour. We are also able to beat other buyers to the
exchange which is critical in the current market.
So where should you buy in Sydney?
The Sydney market has over 630 suburbs – however not every suburb will perform at the same rate. The key to good buying is selecting suburbs that are not fully priced, ie they have stronger potential for growth. Look for suburbs undergoing gentrification, where the character is changing via rezoning, redevelopment or rampant renovations. Pick properties close to shopping centres, transport nodes and good schools or universities.
The blue chip areas of Sydney include the Eastern suburbs, Upper and Lower North Shore, the Inner West, the Northern Beaches and the CBD. Other areas to watch include Western Sydney which has strong potential for growth coming off a lower price base, Northern suburbs surrounding the new North West train line extension, suburbs linking to West Connex motorway and the inner west light rail extension.
If you are in the market to buy a property this spring, please call our office on 1300 655 615 to discuss your requirements, or email your inquiry. We would be delighted to help.
2. Seminar - Value Adding Strategies for Profit & Cashflow
Ever wondered how some property investors seem to have all the luck? They seem to find the best deals, create the most profit and develop a large property portfolio. Well the good news is that anyone can do it. It is not about “luck”. It’s about being clever by taking the time to clarify your goals and focus on a specific property investment strategy that is proven to work.
With interest rates at historic lows, and likely to stay low for the medium term, now is an ideal time for savvy investors to take advantage of the market conditions. Would you like to discover how to create positive cashflow property investments to add to your portfolio? Understand the secrets to a success subdivision process? Learn which strategy will work best for your personal situation?
You are warmly invited to hear some fabulous speakers share their knowledge and expertise that will help you confidently take the next step. Join us for an incredible power packed seminar that will take your investment potential to the advanced level.
The property market is beginning to stir and this momentum creates excellent opportunities for investors to capitalise on the change of positive sentiment.
Topics covered include:
- Investing for profit and cashflow
- Which strategy works best for me
- Granny flats - dual income for positive cashflow
- Subdivisions - creating equity and cashflow
- Renovations - what works and what doesn't
- Development sites with profit - assessing feasibility quickly and easily
- Methods to safeguard your next property investment
- Risk Reduction - must know legal angles
- Financing the deal - discover what lenders want
- Maximising your depreciation - claiming everything you can
- Your questions answered!
Date: Wednesday 9th October, 2013
Time: 7.00pm to 9.30pm (6.30pm for registration)
Venue: The Epping Club, 45-47 Rawson Street, Epping, NSW
Cost: $29 double ticket, $19 single ticket
Rich Harvey, Managing Director and Founder, propertybuyer
Pete Aguinaldo, Founding Director, Direct Property Solutions
Wade Crawford, BMT Tax Depreciation, Quantity Surveyors
Jenna Ford & Albert Waldron – Partner Chan & Naylor Finance, Finance Strategist
Limited seating available - Click here to book your tickets online NOW!
3. Client Stories
Here is a selection of feedback from some of our happy clients last month:
"Great value & excellent support..."
Matt & Liliana, Medical Sales Rep & Customer Service Rep
Buyer type: Investor
Buyer's brief: Looking for an affordable property either neutrally geared or cash positive if possible. Budget under $300,000.
Matt & Liliana's story
Clearly demonstrated how the location is positioned in relation to other growht areas with comparable ices to show good value. We felt confident that we have found a property that meets our criteria and happy to be progressing our goals. Great value and excellent support through all stages of the selection.
"...we have found a great property that meets our criteria"
Buyers' Advocate, Kevin Mason
We were able to find Matt & Liliana a well price 4 bedroom, 2 bathroom townhouse on 400 square meters of land well within their budget with an existing tenant showing a very healthy cash positive return of around 7.27% gross yield.so happy, they arre ready to buy again.