Why it could spell danger for many property investors

You know that the Sydney market has dropped quite considerably over the last 12 months and even the last two years.

But just looking at even the last 12 months depending on which report you’ve read, prices have dropped from 8 to 11 per cent.

Yet there is one suburb that has bucked that trend completely.

It’s risen by 20 per cent or to be accurate 19.9%.

What was that suburb?

It was Vaucluse with a median price point of six million dollars.

Now if you’re someone who can afford that kind of price point fantastic, you might want to look at Vaucluse.

But let’s be real.

99% of people living in Sydney, 99 percent of Sydney’s property investors can’t afford that kind of price point.

But when you see a suburb that bucks the trend, when you see a suburb that’s an outlier…

When all of Sydney has been dropping and this one suburb rises in value it can really skew people’s analysis.

Why?

Because there are bound to be reports coming up in the media which average out all the suburbs in Sydney and then give you a net price increase or decrease about what the Sydney market has been doing.

And that can be really misleading, in fact dangerous.
Here’s why!

For example if you see a suburb like Vaucluse had risen by 19.9% you could easily think, well if that suburb is increased maybe a suburb like Rouse Hill or Epping or Ryde or Liverpool, those suburbs can increase except those suburbs have all dropped by anywhere from 18 to 22 per cent over the last two years and although some of those suburbs are showing signs of recovery there’s no major growth expected in those areas.

So you need to be careful when you’re investing because you’re not investing in a city, you’re investing in a particular suburb.

So yes at the moment a lot of people are talking about the Brisbane market being the strongest performing market for capital growth but I see a lot of people especially in Sydney and Melbourne just saying, “Oh well if it’s the Brisbane market, I’ll just buy something I can afford, something close to the CBD and I’ll make money.”

No you’ve got to do your research and you’ve got to look at individual suburbs.

Ultimately you’re buying property in a particular suburb. You need to know the vacancy rate, the infrastructure and the population growth just as a starting point to see if that’s a suburb that’s got the best chances of capital growth going forward.
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