Real Estate

Growth down but yields up

WHAT are the benefits for investors of a softening Sydney market?

With Sydney’s prices softening, we have seen the knock-on effect for investors of increase yields. This is due to the gap between price and rent closing.
When we meet with investors we discuss what strategy best suits them. It is important to understand the drive behind their purchase – are they looking at immediate capital growth or a higher yield?
In a heated market like the previous few years, the growth was high which meant the gap between rentals and purchase price was greater. This in turn decreased the yields on average 3.3 per cent plus.
Now in a softening market, we have seen the gap decrease between price and rentals which has increased the yields. Our average investor yields for blue chip locations close to the city, transport and shops, are 4.2-4.7 per cent gross yields.
While the market is on a downturn, the capital growth will be limited however on the upside, the yield has increased. This is great for investors paying low interest rates reducing their out-of-pocket expenses.
If you need help identifying which investment property is right for you, give us a call on 1300 447 732