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Empower Wealth Blog post by Empower Wealth

2015 Australian Property Market Outlook | Part 1 – Sydney and Regional NSW

To deliver you good quality educational content on the 2015 Australian Property Market and how you can invest in properties in each different state, we’ve split our 2015 Outlook into six different parts! In part 1 of Ben Kingsley and Bryce Holdaway Property Market Outlook, we look at our Number 1 economy at the moment, New South Wales.

What’s going to happen in Sydney? What are the infrastructure changes? Which areas will be affected positively? Where is the property investment hotspot? Watch this video today to find out more property investment tips and advice!

The 2015 Australian Property Market Outlook is broken into six short parts.

Part 1: Property Market in Sydney and Regional NSW
Part 2: Property Market in Melbourne and Regional VIC
Part 3: Property Market in Brisbane and Regional QLD
Part 4: Property Market in West Australia, South Australia and Tasmania
Part 5: Property Market in Northern Territory and Australian Capital Territory
Part 6: Summary of Australian Property Market in 2015

 

2015 Australian Property Market | Sydney and Regional NSW [Transcript]

 

Ben: Hello. Ben Kingsley here, CEO and Founder of Empower Wealth and I’m here with my business partner Bryce Holdaway and we’re looking at the property outlook, what markets are going to be hot and what markets are going to be not in 2015. Thanks for joining me Bryce.

Bryce: Yeah, and happy new year to you as well Ben. But look, I think if you were a property owner in Sydney in the last 18 months, you’ve done really well.

Ben: You have.

Bryce: It’s a 13.2% growth I did last year and Melbourne also had a good run that they did in fact the same average as the whole country. It’s what Melbourne did at around 8.5 percent. But I think it’s time to reassess whether or not you’re going to invest in those big cities as a general rule.

Ben: Right, Bryce. So let’s go around the ground. Let’s have a look at each of the states and talk about them in more specific detail.

So let’s start with New South Wales which is our number one economy at the moment. It’s thriving from infrastructure development and there’s a lot of good infrastructure development around modes of transport.

So we’ve got light rail coming into the sort of down through the Randwick area and that sort of area, which is really exciting for that particular marketplace. Then we’ve got the road infrastructure where we’re sort of looking at these linked roads that are sort of these ring roads they’re trying to create up there and then finally we’re also seeing some new rail also being stretched out into some of the northern suburbs and some of the Western suburbs as well. So overall, some really good infrastructure. But let’s talk about the Sydney market. What do you think?

Bryce: Yeah, a big city. It’s never a bad idea to have good real estate in Sydney but a very high percentage. In fact 59.8% of the finance approvals in the Sydney market were for investors so largely driven on the back investors that had a really good run. But if you’re thinking about investing in Sydney right now, I’m not sure that’s the best place to be. In fact there’s probably some ripple areas that we would consider first in …

Ben: Yeah, there are. I think that’s the message of the pace of growth. So we still believe that there’s going to be growth in the Sydney market but the pace of growth is going to slow. What we normally see once we come off the height of these cycles is some of the gains that are made at the end of the cycle are actually given back.

So obviously from your point of view in doing your own research, you need to make sure that you’re not in a herd mentality and jumping into that. So that’s the Sydney story and there’s a bit of that in Melbourne as well.

So in terms of our Sydney market, we’re a bit of a wait-and-watch. We’re not necessarily active in there for a lot of clients. We still have some clients that we’re buying for that have told us that’s their brief. They want Sydney. But ultimately we think the money could be better generated and returns could be better generated elsewhere.

So let’s look at around the New South Wales marketplace. What areas do you think might be ones to watch Bryce?

Bryce: Well, you like the Hunter Valley in particular, don’t you? Because it has still got a strong economy. It’s not too far away from the city. It has got some good lifestyle drivers that exist there. It’s a really nice place to go and be and you still do have that access to the capital city job market. So that’s probably one to watch.

Ben: Yeah, it is the ripple effect. So what we’re seeing is the affordability story of the Sydney basin, that Sydney bowl. We’re obviously trapped by the Blue Mountains and what we can do inside that. So – and obviously again with better infrastructure, quicker trains, more road access to get people to the fringes of Sydney where they can actually get reasonable incomes but then go back to those lifestyles, which means that those marketplaces would be something I would be likely to watch.

If we move down South and have a look at the Southern corridor through Wollongong and down into Eden and those types of areas, for us, not enough activity going on there. It certainly passes the lifestyle test. Great coastal community but no jobs. So from that point of view, there’s really nothing that we see down there and if we go up to the top, the border between New South Wales and Queensland, there is a little bit of an opportunity in there around that sort of Gold Coast and that sort of over the border area. So we will talk more about that when we talk about the Gold Coast as we do that.

So overall, some opportunities in Regional Victoria – New South Wales, sorry, and there’s going to be some – that’s more of the yield play with some growth coming in behind that.

Bryce: Because I think that’s the important thing to consider too because Sydney has done so well. The yield is actually dropping off quite considerably.

So the shortfall for an investor who actually even is considering buying in that Sydney market is quite dramatic because of the price grade because there is that lag with the rent. So if you are keen to buy in New South Wales, Sydney is always good.

You’re always going to find some good opportunities somewhere within that market but those are – as a blanket rule of opening up the paper and settle and say, “I’m going to buy that one,” I don’t think that’s a good strategy anymore. So being a bit more specific and as you said, sort of looking a bit more towards the regional areas as well.

Ben: That’s right. As you say, rising tides lifted the ship. So let’s move on to the next location. So let’s look at Victoria now. Let’s start with Melbourne.

 

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