Sydney Market is Hot, Should I buy in Brisbane?

This is a question I get asked all the time by would-be property investors. Whenever the Sydney property market heats up, Brisbane starts looking like a good bet. People were asking it in 2013, in 2014 and now in 2015.

I think we are all agreed, Sydney is experiencing unprecedented competition and this has resulted in sharp price rises in recent years. But does this mean that quieter markets offer better investment opportunities?

Well, when considering whether a property will be a good investment we need to focus on three main elements: the purchase price, yield AND capital growth rate. Granted, you will get more for your money in terms of square metres in Brisbane, but how do the rents compare and will the property increase in value at the same rate as Sydney?

Based on recent figures released by Corelogic, the answer is that Brisbane simply isn’t looking that exciting for investors. Granted, the Sydney median unit price is $630K, whereas you would get change from that budget after buying a house in Brisbane, where the median house price is only $480K. The median unit rental yield for a Sydney unit is 4.3%, against Brisbane’s median house rental yield of 4.5%.

The big difference is the capital growth rate. If you spent $480K on a house in Brisbane a year ago and it grew in value at the median rate (2.3%), your asset would have increased by a sliver over $11K. If you bought a really small unit in Sydney for the same money and it grew in value at the median rate (9.7%), the increase in value would have been a tad over $46K.

I know where I would rather be buying an investment.

Further reading:

Buy property in Sydney – Can you still buy something close to the CBD for under $500,000?

Location, Location, Location – how to choose a good suburb

Price is what you pay – Value is what you get

First published:- 5th Jun, 2015



Please note:

Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.

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