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Investor obsession with Sydney must stop

11 April 2014 Staff Reporter

"Too much heat" in the Sydney property market is making it hard for investors to negotiate on favourable terms, according to one property consultancy firm.

According to managing director of Aviate Group Neil  Smoli, investors have an almost singular mindset that Sydney is the best market in which to invest – especially locals.

“Perhaps it’s based on familiarity, perhaps it's emotion, perhaps the hype of media reports is beginning to take effect,” Mr Smoli said.

“Whatever the reason, the facts don’t lie. Our research tells us very clearly what some investors already suspect and others do not: there’s too much heat in the Sydney property market at the moment, making it difficult to negotiate favourable terms or pricing,” he said.

Affordability issues were highlighted as a barrier for entry to many investors, even those with wallets that can handle the purchase.

“However, for those who are able to secure this finance, another question comes to the fore. That is, as an investor, do you really want to expose too much of your borrowing capacity to one property?" asked Mr Smoli.

“From a risk mitigation perspective, the more prudent course of action would be to purchase two properties in different cities to avoid concentration risk,” he said.

His claims reflect a recent report that suggests Sydney is well and truly a seller’s market.

“The balance of power in Sydney is undoubtedly with vendors. They are dictating prices. A quick look at some of the inflated prices that are being achieved – even for sub-standard product in suburban markets undesirable to investors – illustrates the point,” said Mr Smoli.

Investor obsession with Sydney must stop
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