Sydney Market Correction - Buy Now Or Wait?

Investors waiting for a potential Sydney market correction must consider opportunities elsewhere or risk losing out on potential capital growth gains. Strong media focus on New South Wales’s State capital means you’d be forgiven for thinking the real estate world ceased to exist anywhere else, but this is where serious investors are making inroads. They understand the Australian property cycle and know how to get in on the upswing with maximum capital growth benefits available. If that means investing interstate, they’re not afraid to hold back and profit from their strong opportunity focus and determination.

Sydney state of play

Lately, my conversations have been dominated by questions on the direction of the Sydney property market. People want to know what’s happening right now (largely due to media sensationalism telling people it’s all going to fall apart). As most people are aware, Sydney properties have seen a prolific percentage of capital growth and as auction clearance rates begin to wane, Sydneysiders wanting to invest are unsure of the places to put their money. There’s definitely affordable value markets in capital cities right now, but many Sydney investors are taking the stance of sitting back and waiting to see what happens in the local property market.

Action best way forward

The confusion around the best time to buy - and the best location - is a direct result of not having an investment strategy. Serious investors know what they want to achieve and they’re not distracted by doom and gloom media predictions. They’re constantly looking for great properties in strong markets in other capital cities, adding to their portfolios when their financial position allows. They understand that the time you’re not in the market is wasted opportunity. You could be holding property and getting capital growth from it - the leverage required to get you into that next property and continue to grow your portfolio.

Knowing the cycles is key

Long-term trends speak volumes when it comes to investment timing and it pays to reflect on the way that property has performed over the past 40 years. According to a March 2017 study on Australian property prices, it’s evident that although every State has its own property cycle (and there are cycles within different areas in each State), property values tended to follow a typical pattern. In a 10 year plus cycle, there seems to be three to four years when the market is flat, followed by three to four years of low growth and a few years of strong price growth during the boom stage - and that’s why property investment is a long-term play.

Follow growth elsewhere

Look outside of Sydney to other capital cities where there are many great value dwellings with the right investment potential. Even if you’re buying in at Sydney’s lowest price point, an older apartment will cost about $500k. In other capital cities, you may only need to spend around $400k, with much better capital growth potential and a good, strong rental yield. This much smarter and affordable buy will enable you to buy again sooner when you get the gains from strong capital growth in the early years of purchase. You’ll also reap the rewards from good cash flow in an upwardly trending market by holding the property for at least 10 years. Now that’s what I call really smart property investing.