In Australia, we’re all very accustomed to the idea of one day buying our own home. In fact, the ‘Great Aussie Dream’ is literally just that – home ownership.
But what if that’s not always going to be the case?
Did you know that 70% of New York City residents are renters? That’s the complete opposite of the national average, where 68% of Americans own their homes.
We know that real estate in New York is astronomically expensive, but it’s something that we might very well see here in Australia one day.
Sydney is Not That Different
What we know about Sydney is that property prices typically increase at around 7% per year. In many of the blue-chip areas, prices grow at an even faster rate at times.
What this does is create pockets where property prices far exceed what people are able to pay for them. The driver of much of this is the extreme level of population growth. Each year more and more people come to Australia, and with only so much land in our major cities, values will only keep going one way.
So what does this mean for people wanting to buy in Sydney?
It might actually mean that just because you are born in Sydney, you might not actually be able to afford to buy there. The days when you could have an average job, have your wife at home with the two kids, and afford a nice family home are long gone in Sydney.
You need to have an income that is well above average just to survive.
However, it doesn’t mean property ownership is out of the question. Looking at the US, many investors buy properties in areas well outside the major cities. In fact, many locations offer properties with rental yields well above 10% – something you’d only likely find in Australia in a mining town.
Investors in the US will invest where they can afford and then rent in a place like New York, LA, or Hawaii.
For a city like Sydney, that might be what we see in the future. People might be forced to rent and then invest elsewhere in places like Brisbane or Newcastle.
What Can You Do?
If you want to own a property in Sydney, then you’ve still got some options. The first thing to consider would be to get started and buy a property as soon as possible.
With property prices only headed one way, there are still opportunities today to get into the market. In time, you can upgrade your property as your income and equity rise.
You also have the option of investing elsewhere and building up a portfolio. If you can’t get into the Sydney market, this might be an option.
There are also other ways to build wealth with property, such as renovations or even small developments. These can generate significant equity and help you jump ahead instead of being forced to wait for natural growth to occur.
The main thing to consider here is that you need to be proactive. Sydney will eventually price out most buyers, but that doesn’t mean you have to miss out.
If you’re prepared to take an active approach and get involved now, there will still be ways to buy in Sydney.
A professional Sydney buyers agency or a Sydney buyers agent can provide tailored advice and assistance, making the process less daunting.
