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Strong investment market set to continue

10 September 2014 Elyse Perrau

Sydney rental yields are holding, rents are rising and vacancy rates are low – all signs of a continuing strong investor market, says a leading senior economist.

Domain Group senior economist Dr Andrew Wilson said, at this stage Sydney is still a balanced market where investors are on track with their investment models.

“Now, whether that pans out in the longer term will be interesting, but at the moment that investor market is holding up because all the demand factors are still moving in favour of investors,” he told Residential Property Manager.

“Yields are holding, rents are rising, vacancy rates are still low – I think a lot of that is because we have low first home buyer numbers in the market, there has been very strong immigration into NSW over the last 12 months, and I think a lot of investors have sold too, so there has been a bit of trading amongst new investors and old investors.

“Of course yields are still low in Sydney, but it is never about yields with investors, it is always about capital growth and as long as capital growth keeps flowing, then investors will continue to invest here,” he continued.

“As long as immigration holds up, as long as the local economy is okay, then that investor market is set to continue.

“Units are still strong in Sydney and there a few reasons for that: affordability of course, a shift to a more convenient location closer to the city, also lifestyle choices – people are starting to choose units over houses.

“We are tracking unit rents just about at the same level as house rents at the moment – so they are sort of converging because of that affordability issue,” he said. 

Strong investment market set to continue
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