Less than four per cent of property investment experts believe Sydney offers solid prospects in 2018, according to a new survey.
The Property Investment Professionals of Australia (PIPA) 2018 Member Survey found that only 3.85 per cent believed investors should buy property in Sydney this year – down from 11 per cent in 2017.
In fact, about 15 per cent of survey respondents believed that Perth offered better prospects than the Harbour City, a significant upswing from last year’s result of 3.7 per cent.
Brisbane was the capital city which offered the best investment prospects this year, according to 46 per cent of respondents.
Brisbane was the top pick by property investment professionals in 2017 as well, with 44 per cent selecting the Queensland capital last year.
“Sydney’s strong price growth over the past five years has resulted in its property investment metrics no longer adding up for sophisticated investors,” PIPA chairman Peter Koulizos said.
“Its sky-high property prices means that rental yields are constrained and smart investors aren’t prepared to make up the difference in cash flow from their back pockets.”
Mr Koulizos said Brisbane’s affordability was one of the factors why it was again selected as the capital city with the best property investment prospects.
The property price differential between Brisbane and Sydney in particular was underpinning increasing interstate migration into the Sunshine State, he said.
“When the numbers are literally two for the price of one, it’s no surprise that owner-occupiers and first homebuyers are opting to head north to southeast Queensland to take advantage of its more affordable property prices,” he said.
“Perth is back on the radar after a number of years of poor market conditions, but its market is still uneven so investors must undertake thorough research before buying into that market in my opinion.”
Melbourne was again the second best location for property investment in 2018 according to 19 per cent of survey respondents – down from 29 per cent last year.
According to the annual survey, the biggest concern for property investment professionals this year remains the tightening of lending to investors.
However, 100 per cent of respondents are optimistic about their businesses for 2018, with 56 per cent indicating they would employ more staff this year.
“Our members remain overwhelming positive this year, even in the face of higher interest rates for investors as well as tougher lending conditions,” Mr Koulizos said.
“The APRA restrictions appear to have reduced the number of speculative investors in the Sydney market in particular, however, educated investors have also been unfairly caught in the crossfire.”
Mr Koulizos said the government and industry regulators must address the need for comprehensive regulation of property investment advice to reduce speculation in the market.
“Introducing a minimum standard of education or qualification for those providing property investment advice would ensure that investors can receive the same level of appropriate guidance provided to anyone investing in other asset classes,” he said.
“Property investment remains a sound strategy for many Australians who desire to improve their financial positions over the long-term.
“A regulated property investment advice sector would remove unscrupulous operators from the marketplace and protect consumers from fly-by-night spruikers whose only interest is their own.”
Which state capital do you believe offers the best property investment prospects for 2018?
- Brisbane 46.15%
- Melbourne 19.23%
- Perth 15.38%
- Adelaide 7.69%
- Sydney 3.85%
- Canberra 3.85%
- Hobart 3.85%
- Darwin Nil