Investors beware as Sydney’s new apartment numbers look to be adding up to a glut in inner city housing.
A recent report by BIS Shrapnel estimates that over 5000 apartments being built in the city area right now, and property experts are warning of an over-supply of accommodation, and a subsequent drop in both prices and rental returns. For short-term investors who rely on rent to cover mortgages this can put a dent in the investment strategy. With the looming threat of rising interest rates, this can move a property investment from viable to non-viable in the space of a couple of months. In addition to this, the capital price of the property can also drop below the initial purchase price which can make any exit strategy look less attractive as well.
For those looking to get into property investment, a dip in the market like this can be good news if you are willing to hold on until the market re-calibrates and outlook is more positive. Patience and a strong savings plan can put you in prime position to pick up a bargain when prices are still down and rental demand starts to rise again.
For those with a more long term investment strategy, it is wise to secure a long-term tenant – even if that means at slightly reduced rates – to ensure a consistent income, rather than being left with an empty apartment in a sluggish market where tenants have both choice and bargaining power.
Not everyone agrees with this outlook with developers such as Mirvac who are reportedly looking to continue their development growth in the Sydney city area to feed a high housing demand. They see this trend holding strong for the next 5 years and are planning accordingly.
The other winner in the apartment boom are the mortgage brokers who have been busy facilitating first home buyers and small and first time investors. Interest rates have remained reasonable and lenders are highly competitive, leaving borrowers with a good range of options to suit their needs.
Whether you are considering an investment or a first home, buyers agent Amanda On My Side can help you find exactly what you are looking for. Contact Amanda now.
