Series Of Row Houses With Trees Outside

Property Investment Sydney vs Brisbane

We’ve seen a lot of arguments over the last couple of years when it comes to investing in property in Sydney versus investing in Brisbane. And the simple answer as to which is better right now is: it depends. This is because people’s reasons and goals in property investment differ substantially, and your investment goals should substantially affect which city you choose.

Summary

Sydney is still a good investment – but primarily if you’re looking for long-term opportunities. We’d recommend Sydney for people who want 10-15 year investments and can afford the rather expensive price tag that goes along with the Sydney property market. For those who don’t have as much money to invest, or are looking for faster returns, Brisbane should be a better option as its property market is cheaper and expected to grow over the next year.

The property cycle

Sydney tends to follow a cycle of 2-3 years’ substantial growth, followed by around 10 years’ plateau. Brisbane follows a similar cycle, but 2-3 years after Sydney’s. This has to do with investor migration: typically, Sydney property is seen as highly desirable, but as prices rise more investors find themselves no longer able to afford properties in Sydney, so instead buy in other capital cities, like Melbourne or Brisbane. This causes demand to rise in Brisbane, but a couple of years after demand has risen in Sydney.

Where in the cycle are we?

From 2003 to 2013, Sydney experienced close to zero growth in its property market, but in the last three years grew approximately 10-15% each year. Looking at the historical cycle, we expect ten years of zero to slow growth in Sydney property. Brisbane, however, is still following Sydney prices upwards – so we expect a 10-15% increase in property prices in Brisbane over the next year.

Where should I invest?

Where to invest really depends on your personal investment goals – and your budget. Have a look at the following table to see the pros and cons of each city, and which of these are applicable to your situation:

City Pros Cons
Sydney – Population size – sustains a very good growth rate.  Only need 1% growth in population and that adds eg 300,000 people.  More demand for rentals.

– Infrastructure.  Because of size of pop have a lot more money to spend on infrastructure.  Creates more areas open to investors as all have good transport and infrastructure.

– Employment.  Lot of big multi-national companies, so seen as a hub for southern hemisphere by these companies.  Strong employment.  More supportive for rental market.

– Higher salaries.  Attracts more people.  Consistency for rental income.

– Rents are much higher.

– Market is now at a peak.  Has had two solid years of high growth.  Low potential for any capital growth over the next few years.

– Cost to buy in to this market is very high.  Sydney doesn’t allow the option to diversify much as all eggs may end up in one basket as prices are so high to enter the market.

– The cost to live in Sydney is much higher than Brisbane.  Although salaries are also higher.

– Rents are much higher and sometimes can be difficult to fill because of price.  Depends on the people etc.

Based on the median house prices REIA from 1970 – 2013

Brisbane – Much cheaper market to enter into.  Allowing the investor to keep risk and exposure levels down.

– Brisbane market hasn’t had the massive increase that Sydney has had yet and based on historical data we can expect to see growth over the next couple of years.

– Smaller market so less people interested in rentals than would be in Sydney.

– Less international companies in Brisbane to Sydney, however the Port of Brisbane is seen as being closer to Asia than Sydney and so more companies are looking into the Brisbane area for office locations.   https://reia.asn.au/cooling-housing-market-has-a-silver-lining/