Expert Advice with Philippe Brach 17/04/2017
Sydney looks set to record another year of solid growth this year. While the city may not smash through the double-digit figures it’s been achieving for the last few years, Sydney property owners will likely see their assets move forward in value before the year is through.
For those who already own property in Sydney, this is fantastic news.
To those people reading along who don’t have a Sydney property in their portfolio, I urge not to despair just yet!
Many investors have recently expressed their frustration to me, lamenting that they feel they are ‘locked out’ of our capital city property markets. Sydney is getting too expensive with low yields, they complain, and Melbourne is catching up. Adelaide is in a low growth phase and Perth is in the doldrums, while Brisbane is at risk of over-supply… So where are they meant to invest?
Not where, but what
The answer to this question isn’t where, but what.
All too often, people get caught up worrying about where to invest. Which suburbs are in a high growth phases? Which cities are set to boom? Which locations are showing strong signs of population growth?
These are great questions to ask and they’re certainly important to your investing success.
But rather than focusing on exactly where you want to buy, investors would be far better served by concentrating on what financial fundamentals they want to see before they invest. This will ultimately dictate “where” to invest.
These fundamentals include:
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Capital growth. This is what will create wealth. It relates to population expansion, economic drivers, amenities (schools, shops, childcare facilities, medical facilities, sporting grounds, etc…), infrastructure, transport, etc…
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Cash flow. This is what will allow you to afford these properties until you can cash in capital growth. So yield is important (and is lacking in Sydney and Melbourne), especially if you are looking at building a property portfolio.
Investment ‘triple winners’
For many people, the truth is that Sydney is priced well out their reach, or the structural low yield is too punishing to their cash flow. It will probably remain that way for the near future. However, fortunately, Australia is comprised of thousands of individual property markets – and Sydney is just one of them.
When you begin looking for your next property with structured criteria at the back of your mind, you can start to see that Sydney isn’t the only location in Australia that provides capital growth. In addition, better yields than Sydney will make these locations a lot more attractive for you in the current market.
In fact, across the country, there are a reasonable number of areas that offer the coveted ‘triple winners’ investors are chasing: great growth prospects, acceptable yields, and an affordable price tag. Uncovering them is simply a matter of knowing exactly what you need to look for and doing your due diligence.
Philippe Brach is CEO of Multifocus Properties & Finance. He has over 15 years experience in property investment and has helped many first time and experienced investors achieve their goals. He is also the well-recognised author of the book ‘Creating Property Wealth in any Market’ which lays out in detail what it means to invest in property.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property
