Taking Advantage Of A Buyer's Market

Taking Advantage Of A Buyer's Market

Mark Taylor,

With prices down by as much as 15-20% across much of Sydney, conditions are the best they’ve been in a decade if you’re looking to invest.

Whether you’re a current landlord who is ready to expand your portfolio or a would-be first-time investor, the time is right to scoop up a good property deal. 

Prices Are Down

According to data from Domain Group, median prices across many Sydney suburbs have fallen more than 15% in the last year – in some cases by as much as 20%. If you’re in a position to invest it’s as good a time as it has been in a decade to find an attractive property in the right area at the right price.  

Conditions Favour Investors 

The Morrison government’s surprising recent win in the federal election has implications for real estate investing in Sydney’s Eastern suburbs. Negative gearing is here to stay – at least for the foreseeable future. The continuation of this tax minimisation strategy is good news for those with investment properties in blue chip suburbs, which tend to be negatively geared. 

The Liberal party has also pledged to retain the current Capital Gains Tax (CGT) policy, whereby property investors can discount the capital gain on their sale for tax purposes by 50 per cent. This is also a big bonus for property investors in areas such as the Eastern suburbs, many of which are still recording good capital growth despite the weaker market conditions. 

What’s more, with the outcome of the election now known and these measures certain, we expect to see more confidence returning to the market in the second half of 2019, particularly when it comes to investors. 

Interest Rates Are At Record Lows

The cash rate is currently at an all-time low of 1.5 per cent and seems likely to remain at historically low levels for the foreseeable future. Be sure to shop around for your loan to take advantage of the record low rates. 

Reduced Competition

The softening market conditions have seen many buyers and sellers shy away from the market. Those in a position to buy now have less competition to contend with and can take their time negotiating with vendors and making a well-considered purchase. 

Lending Rules To Loosen Again 

In the wake of the Royal Banking Commission, banks significantly tightened their lending conditions, which greatly reduced buyer activity. However, the Australian Prudential Regulation Authority (APRA) has now asked banks to relax lending rules. APRA has flagged that it will lower its minimum serviceability buffer from 7 per cent to a level determined by banks and other lenders.

Opportunities Abound In The East 

There are some excellent opportunities for investment in Sydney’s Eastern Suburbs in blue chip areas, many of which are maintaining low vacancy rates, good capital growth and high rental yields despite the downturn.  

Data from realestateinvestar.com.au shows that many Eastern suburbs have maintained high growth over the past two years, particularly in beachside suburbs such as Bondi, Bronte and Clovelly, as well as in infrastructure hotspots such as Kensington and Randwick. 

If properly managed, an investment property purchased now in the Eastern suburbs will return solid rental yields and good capital growth over the long-term – the fundamentals of any sound real estate investment strategy. Check out our first time investor checklist for what you need to know before you buy. 

No Matter Your Investment Strategy, There’s An Eastern Suburbs Property For You

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