The Sydney residential market has begun to gain some serious momentum over the last twelve months, recording growth in median house prices of twelve to fourteen percent. A solid result in a low inflation environment which has been widely covered by the media but behind those headlines we find some interesting realities:
On the supply side of the equation, building approvals have begun to pick up but we still have a long way to go before the supply & demand equation reaches equilibrium. This, weighed with the fact that real growth in Sydney over the last decade is only just catching up with inflation, indicates there is room for Sydney values to grow further over the period ahead.
For a variety of reasons relating to price point, existing and future infrastructure, local demographics, employment and transport to name a few, we currently favour medium density property in Sydney’s western corridor, between Parramatta and Penrith. With that in mind we’d like to draw your attention to a new investment recommendation which is available now with completion estimated for mid to late 2015.
Blue Vista, is situated in the Sydney suburb of Glenmore Park and consists of thirty-nine dwellings in one, two and three bedroom configurations, ranging in price from $325,000 to $470,000. The average two bedroom apartment is around $395,000.
It is across the road from a project we recommended to clients just before Christmas which was very well received due in part to its bite-size price and impressive location.
For investors acquiring a two bedroom apartment, using 100% borrowed funds, we estimate a year one annual after-tax holding cost close to break-even at the 37% marginal tax rate and becoming cash flow positive at higher tax rates.
An ongoing collection of thoughts, opinions, observations and recommendations by long time property analyst and commentator Brett Johnson.