Why a Cooling Sydney Property Market is Good for Investors

Why a Cooling Sydney Property Market is Good for Investors

Property investment is the fundamental base of wealth in Australia. So when the property market starts to cool, as it is in Sydney at present, investors can become a little nervous. But we’re here to tell you to keep calm and carry on. A cooling market is just part of the normal property cycle – it even has its advantages. In fact, as a property investor, this is a great time to build your investment property portfolio.

As Rene Marzinger, Mirren’s Founding Director explains:

“This is an ideal opportunity to get into a market in another state or in another city because you know you’re not buying at the top end of the market. Buying at the lower end means you’ll have the advantage of capital growth plus the positive cash flow aspect to pay off the debt.”

We follow where Sydney leads

Sydney is the lead city in the Australian property cycle. Generally speaking, the rest of the country’s capitals follow Sydney’s cycle at different speeds.

“The Sydney market is the front runner in the hierarchical flow of the Australian property market and this of course includes investment property,” says Rene.  “As the Sydney market peaks, Melbourne will traditionally follow 18 months afterwards. The Brisbane market has been moving out of its long-term slump and starting to grow.”

It’s important to understand this cycle, in combination with other major trends, when considering an investment property.

Not one market but many

If only it were as simple as following Sydney’s lead. Yes, there is a definite correlation between the Sydney market and the rest of Australia – however, there are lots of other factors at play.

Like all markets, the Australian property market is complex and there are many factors that influence performance, including interest rates, employment figures and housing stock.

For instance, Perth has experienced a slump in housing prices for a prolonged period. This is mainly attributed to the end of the mining boom – a seismic market event that disrupted the property cycle for Western Australia.

In each capital city and state there is also a myriad of micro markets. For example, in Sydney, growth can vary widely depending on which side of the bridge your property is located. In Queensland, the Brisbane market stagnated while Gold Coast property enjoyed considerable growth.

Don’t put all your investments in one basket

You wouldn’t do it with your eggs – so don’t put all your investment properties in one basket. In other words, don’t base your property portfolio all in one city or region. It’s important to diversify your portfolio to both mitigate risk and capitalise on growth across the property market cycle. This is an integral part of Mirren’s proven strategy.

“At Mirren Properties we are looking at property investment across Australia,” says Rene. “We are not just focused in one city or one state; we are focused in Queensland, New South Wales, ACT and Victoria. Not only does this give us many more options, but because the market cycles in each city are different, we are able to purchase at the right time and to exit at the right time.”

Investing across different cities also has the advantage of reducing your exposure to state land taxes. As Rene explains,

“Each state charges a different land tax. The important part to remember is that your house or your primary place of residence is land tax exempt. Any other property or land that you own you have to pay land tax on. Each state has their own thresholds; to avoid exceeding this threshold it’s critical that you don’t have all your properties in one state. You don’t want to incur land tax every year.”

Power of the turnkey

No matter at what point we are in the property cycle, there is one investment that consistently holds value – even in a cooling market.

This is the turnkey property. Undoubtedly, this is because as an investor you can start realising an immediate return without any outlay of capital for repairs and maintenance.

Invest anywhere

One of the benefits of investing in a property is that you don’t have to live where you invest. This means you’re not at the mercy of the property market cycle – you can take advantage of it.

Why Mirren?

The cooling property market is an excellent opportunity for investors but it’s not always easy to navigate.

At Mirren, we are property experts with a deep understanding of the various markets across Australia. We will be able to tell you where good real estate markets are – the ones with good neighbourhoods, areas that lease well, that are close to schools and public transport.

These insights combined with our proven strategy are invaluable to investors and will ensure that you get the return on investment that you’re expecting.

Positively geared investment properties are just a phone call away.

Contact us now for your free initial consultation and start looking forward to your financial future.