I have a total of $50k saved up and I'm a first home buyer looking to get into the property market. Is now a good time to buy in Sydney? And if not, where can you recommend I consider looking instead? Or should I just wait?

Hi Victoria,
If you consider that it is questionable if prices will ever decrease, than it is a case of sooner is better.
I maintain that first home buyers can get into this market if they are sensible about where they buy.
There are loan options available to assist FHBs, so it would be useful for you to investigate what these are.
A professional mortgage planner can show you how you could get into the market without you over committing yourself financially.

Hi,
It is hard to tell if it is a good time to buy or not. Property prices have gone up a lot in the past few years and could still appreciate more. However, once interest rates start to go up, prices may flatten for a while.

if you do not want to buy in Sydney, QLD may be another option for you where you can buy more affordable properties with good rental returns.

Good luck with everything.

https://s3-ap-southeast-2.amazonaws.com/sai-answer/answers/58ad42537caec.mp4

Victoria,

Further to my video message please see this link to a recent news article highlighting what is going on up in Newcastle and how this market is predicted to outpace Sydney over the coming years.

http://www.news.com.au/finance/real-estate/buying/forget-sydney-newcastle-is-the-next-big-thing-to-boom/news-story/80d972d2b908517bcef2960dd8856721

As discussed my company would love to help so if you want to chat about some property options please visit Thirdi Group at www.thirdigroup.com.au

All the best with your property investment journey

Regards

Luke

Hi Victoria,

Firstly, Congratulations Victoria. Saving $50,000 is no easy feat.

You have not specified whether you want to move into the property or you would like to invest.
Clearly if you are going to live in the home, then it will have to be in the city you work in. If it is for investment purposes then you have the whole country to look at, although you need good advice as to where the capital cities are in terms of the property clock. See a summary of Herron Todd and White valuers report as of December 2016.
National Property Clock – December 2016
Some of the key locations on this clock are:
Sydney, Adelaide & Canberra (rising market),
Melbourne (approaching peak of market),
Newcastle and NSW Central Coast (peak of market),
Perth (bottom of market) and
Brisbane & Hobart (start of recovery).

More importantly is how much you can afford each month to repay the loan.
I can work out your Maximum Borrowing Capacity and what your repayments would be. Then you will have a better idea of what properties you can afford.

Regards,

Bulelwa Freer
0414 973 236
freerbg@optusnet.com.au

https://s3-ap-southeast-2.amazonaws.com/sai-answer/answers/58ae159f994a9.mp4

prices wont go down so waiting will not help. buy a rental in hobart

Hi Victoria,

Exciting to hear you're looking at buying your first place!

The first step would be to understand why you're investing and what you would like to achieve and then work backwards from there. The reason I say this is the area and the type of property and how you structure the loan will depend on how what you want to achieve from your investing.

For example if your goal (which can and will change over time) is to replace your salary of say $100K through investment properties then you would want to look at how many properties you need and in what area, ie. you would need 4 properties with a $500per week rent return.

Then you would also want to look at your timeline to pay off the debt against the property so you could retire from work if you wanted to.

If you have a short timeline then you may want to look at a major CBD like Sydney that has the population growth to support property prices increasing, as within 20kms of the Sydney CBD we cannot build property for how fast the population is growing and even if interest rates increase there will still be high demand to rent the investment properties you purchase.

You may also want to consider purchasing a property that needs renovation so that you can add value and increase the purchase price and therefore your equity.

A few things to consider above but the first step is really to understand what you personally want to achieve from investing and then find a property that matches your goal, not the other way around.

You should also consider speaking with a broker about how much you can borrow, they can give you a more accurate picture of this rather than using calculators on the internet as each bank has different internal policies.

If you were looking at buying in Sydney with $50K, you may want to look at an owner occupier loan and a 5% deposit and capitalise the LMI (lenders mortgage insurance - this is a standard fee the banks charge when the deposit is less than 20% of the purchase price of the property you are buying). Then after a month or two or less of the loan settling you can rent this out and make it an investment property which means you will be in a better position to build wealth with a tenant paying the majority of the expenses - this strategy will be dependant on your salary and how much you can afford to borrow.

I wouldn't over extend yourself at this point as owning a property can be expensive and you will want to ensure you can afford this in your own budget and not just relying on a banks borrowing calculator as these calculators don't accurately reflect the costs of owing a property such as the cost of maintenance, strata levies, council rates &c.

If you want a hand with what you should do, have a look at this app we're releasing soon, it's a guide to how to enter the property market and build your portfolio anywhere in the world from your smartphone. It also goes through the different strategies for investing in property and some key questions you should be asking yourself and the professionals you choose to work with... www.investwithsteph.com.

- Steph

Hi Victoria,

Sydney is a hot market and is at its mid-cycle high, so from that stance, I would say this isn't the best time to enter the Sydney market. Given that lending restrictions on investor borrowing and an interest rate hike for investors is suggestive of a potential market slow down, you may see the market go sideways or a slight decrease in prices (more so in the outer ring 25km+ out of the CBD) in the next couple of years.

I would suggest being very careful entering remote areas as an investor or markets reliant on one industry such as mining as they are volatile markets or may take a long time to achieve the infrastructure and investment required for growth. We focus on the Eastern Seaboard namely Australia's largest capital cities when it comes to population, jobs, diversity, income and infrastructure which includes Sydney, Melbourne and Brisbane, but dependent on where each area is at in the property cycle. I would be very selective, even then around what you buy and where.

Lastly, congratulations on saving the $50K. Dependant on your capacity for saving or how quickly you can save another $50K, I'd say you would be better placed to buy with less mortgage insurance and less risk (given stamp duty and buying costs may chew up a fair bit of your savings). I would consider having a chat with a good financial planner and determining your goals - come up with a solid plan around what needs to be done so you are in the best place you can be financially and strategically to buy... Once they assess you, it's worth speaking to an investment property specialist who wont sell you the wrong over priced properties in the wrong areas. I'm happy to have a chat with you when that time comes. In the mean time, feel free to check out what we do at www.examineproperty.com.au

Mireille