Today BIS Shrapnel announced that they anticipate strong rate of capital growth for apartments in Sydney for FY 2014/15 and 2015/16. They anticipate that growth will be approximately 15% over this two year period. IPS is not surprised by this assertion, especially given the fundamental influences presence in the market supporting this figure. Sydney continues to experience stock undersupply and, with ongoing record low interest rates, investors and owner occupiers continue to enter the market.

With the dramatic rise in median values late 2013/ early 2014 in the Sydney housing market many of these hopeful buyers are finding themselves priced out. We expect the shift toward apartments will continue – particularly in light of the fact that units are exhibiting more reliable rates of return. The continued rise in Gen X and Y buyers and tenants in the market compounds the trend of a favouring of units over other asset types as this demographic favours lifestyle and location over land content i.e a heavy preference for proximity to transport, infrastructure and amenity (popular shops, cafes, restaurants) and, of course, their workplace. Apartment living also represents a more affordable option than the other asset types such as duplexes, semis and freestanding houses.

While BIS Shrapnel are amongst the more reliable commentators in the market place we stress that it is important to remember that not all property performs equally. Those properties with good access to infrastructure, in better locations and featuring well designed floor plans will always outperform the wider market.

If you thinking about investing in the residential property market – whether purely pure investment or for your own home – the IPS team is available to discuss what’s happening in your local market on an obligation-free basis.


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