Why context is important in Sydney’s property market
In the face of many reports pointing to a declining Sydney market, one broker has called for investors to put everything into context, as the data is more complex than just looking at a capital city.
Speaking at a property investing event in Sydney’s Surry Hills, Brendan Dixon, managing director of Pure Finance, still thinks Sydney is a good market to invest into.
“If you were to gain 85 per cent in property value and then lose 10 per cent, would you still consider it a bad investment? That sums up what’s happened in the Sydney property market this year,” Mr Dixon said.
Off the back of his own firm’s research, Mr Dixon said that Sydney’s property market is nowhere near crashing, but it is in the middle of what he calls the correction phase.
“The correction phase is, basically, prices begin to moderate and is often equated to a crash, because what is behind property values is they go up, up, up, and when they go down, they go down fast, then they level out,” the MD explained.
“Keeping all of that in mind, observe that Sydney is in a correction phase.
“When we look at the data of September this year [compared] to September last year, we’ve seen a 6.1 per cent decline in property value.”
For some cities, reports of declines have been circulating, with some dropping by as much as 40 per cent, but Mr Dixon said that the situation was more complicated than just observing data at a city level.
Instead, the managing director said that investors should be looking at Sydney on a suburb-by-suburb basis.
“If you look at a suburb like Bronte, it has had gains the whole way through,” Mr Dixon said.
“Then if you look at some suburbs like Wahroonga, they’ve had big drops with some properties.”
The result of all the attention focused on the city-based declines, Mr Dixon said, is that investors should be realising that property prices recorded high levels of growth over the last five years.
“So, unless you bought in the last 12 months and are just trying to sell again, you’re going to be all right.”
By looking at this suburb level of data as opposed to city level, Mr Dixon said that investors should remember to keep property research into context.
“While looking at the market as a whole, it’s important to look at each market, and it’s important to know the forecasting in any market can be quite imprecise in that way,” the MD said.
“So, our suggestion is to always educate yourself on what’s going on.
“You don’t need to worry about the media hype; you just hang in there and you’ll get the returns.”
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