Despite many investors steering clear of major cities like Sydney in recent years, the outlook appears to be changing.

Leveraging recent events like interest rate cuts, APRA restrictions softening and of course the federal election, inner-city property is back on the investment menu.

How the federal election turned the tide for investors

With property analysts predicting Sydney’s real estate market will see price rises by the end of 2019, investors are on the prowl as they look to re-enter the inner-city property market.

Despite the Sydney market declining 14.5% since its 2017 peak, property investors are keen to return to the NSW capital as a number of recent events are flagging a real estate upswing. The federal election, far and away, was a massive win for investors. Since the Coalition toppled Labor at the polls, there’s been renewed market confidence thanks to two major factors:

  • Negative gearing: A Labor Government intended to abolish negative gearing entirely, which would have been a thorn in the side of investors in an already-cooling market.
  • Capital gains tax: Another worry for investors was Labor’s promise was to increase capital gains tax by 50%, which won’t see the light of day under Coalition leadership.

Recent lending changes a boost for property investors

More notable changes have added fuel to the fire that now is the time for investors to return to the inner-city property market.

Two interest rate cuts in as many months from the Reserve Bank of Australia will likely bolster the property market across the country. Dropping 50 basis points overall to a historic low of 1%, the interest rate cuts will be helpful for investors whose home loan demands had been somewhat subdued in the early half of 2019.

The second cut in July pushed those rates down even further, though not all banks passed on the total cut to borrowers immediately.

Also making headlines in July was the Australian Prudential Regulation Authority’s (APRA) decision to eliminate the need for lenders and banks to “assess loan serviceability on the assumption of a 7% interest rate”, meaning they can set their own review standards.

This is good news for investors, who in the past two years have been subject to stricter guidelines for interest-only loans. Experts tip these APRA changes, as well as the recent interest rate cuts, will make the real estate market in inner-city suburbs more accessible to investors once again.

Choosing the right inner-city property

2019 has been a big year of changes in real estate, particularly in the inner-city suburbs of Sydney. So where are the diamonds hiding? Good opportunities abound in areas such as Erskineville, Stanmore and Petersham, with home value declines levelling off, which could indicate growth on the horizon.

But as with any real estate strategy, it’s crucial to monitor the market regularly and investigate property on the ground whenever possible.

Embracing a long-term vision

It’s also important to consider that the overall real estate market has changed significantly in recent years. Not just due to the dramatic highs before an eventual cooling of housing values, but also because of policy changes from government and regulatory bodies alike.

Because of this, property investment should be seen as a long-term strategy rather than a quick fix. The smartest property players are recognising that inner-city suburbs are back on the cards, and there are great deals to be had for savvy investors.

Is now the right time to invest in inner-city property?

Are you keen to re-enter the Sydney market or expand your portfolio now that positive changes are occurring for property investors? Get in touch with me today and I can help you find the ideal inner-city property for the right price.

Brad Gillespie - Property Partner

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