Just one in 10 investors believe Sydney is the best place to buy in Australia, a new survey shows. Experts say the city is too expensive, even for property moguls, and theyâ€™re buying in Queensland instead.
After years of booming prices, property in the harbour city is no longer at the top of investorsâ€™ wish lists, a survey of 1000 property investors by the Property Investment Professionals of Australia (PIPA) found.
But the appetite for real estate hadnâ€™t waned â€“ 71 per cent still believed it was a good time to invest in property.
The majority of investors were prioritising buying in Brisbane, which was ranked the most attractive place to buy by 50 per cent of respondents. Melbourne came second, at 20 per cent, while Adelaide and Perth were preferred by 9 per cent and 4 per cent respectively.
A third of investors said changes in lendersâ€™ policies had impacted on them, but 58 per cent were still looking to buy within the next 12 months, PIPA chairman Ben Kingsley said.
Affordability will always be a key factor for investors and right now Sydney is hitting price points that are unprecedented.Josh Masters, Buyside
â€œProperty investors are becoming more savvy. Many of them continue to look outside of our biggest property markets â€“ Sydney and Melbourne â€“ which are coming close to the peak of their cycles,â€ Mr Kingsley said.
â€œThe two key reasons that Brisbane still attracts investors, in spite of concerns around oversupply, are affordability and the potential for attractive yields,â€ he said. Infrastructure investments were also attracting property investors.
â€œAffordability will always be a key factor for investors and right now Sydney is hitting price points that are unprecedented,â€ Mr Masters said.
â€œItâ€™s difficult to justify the cost when weighed against the rental return.â€
The median house price in Sydney is $1,021,968, Domain Group data shows.
Even buying an apartment in Sydney, where the median is $669,830, is a more expensive proposition than buying a median priced house in Brisbane â€“ at $521,915.
He said the â€œsmart moneyâ€ was looking at houses in Brisbane, with some clients also looking at the Gold Coast, Newcastle and Canberra for growth prospects. For those who could afford the price point, he said there were still strong long-term growth prospects for high-demand suburbs such as Redfern, Surry Hills and Randwick.
For most investors, itâ€™s not a lack of desire to buy in Sydney but an inability to afford the cost, WBP Property Group executive chairman Greville Pabst said.
â€œI donâ€™t see Sydneyâ€™s popularity wavering, thereâ€™s just an affordability issue. The Sydney property market has grown approximately at a rate of 9.4 per cent annually, which is making it difficult for some people to enter the market,â€ he said.
The majority of buyer inquiry over the past few months has been for Brisbane, even from Sydney-based buyers, Advocate Property Services director Jo Vadillo said.
â€œAffordability, opportunity and fear they have missed the Sydney boom is often the feedback we hear for the South East Queensland interest,â€ she said.
â€œBrisbane is a rising market, properties are selling fast. We are seeing a very similar pattern to the way Sydney took off,â€ she said.
â€œMany Sydney investors are using the equity in their homes to now invest.â€
After four years of solid growth in Sydney, it was just â€œcommon senseâ€ that investors were turning towards other cities, AMP Capital chief economist Shane Oliver said.
â€œInvestor rule number one is to buy low and sell high,â€ Dr Oliver said.
If investors were looking to buy at the bottom of the cycle, he said Perth and Darwin should be on their radars as â€œprices are back to where they were last decadeâ€.