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Sydney’s Property Market Conundrum & Why It Isn’t A Great Investment Move

Ah, Sydney! Australia’s prized gem, its iconic skyline and dynamic culture, beckoning property investors for decades. But the dream might be more elusive and not the smartest move for many investors. The reality of Sydney’s property landscape seems to present more formidable challenges than opportunities. Here, we delve into why this is and what your alternative investment options are.


Sydney’s love/hate relationship with real estate

Without a doubt, Sydney was once the golden child of growth, intriguing investors with its historical strength and consistency. But recent trends are painting an interesting picture, showing a plateau in the market and the next boom not on the near horizon.


A chasm between property aspirations and financial reality has opened up, influenced by the property cycle's upturn, soaring living costs and stagnant wage growth. In other words, the lack of affordability simply outweighs the reasons to invest there. The boom of 2020-2021, with prices rising 27.2%, was met with values plummeting in 2022-2023 by 12.4%. The median house price for Sydney in December 2023 is $1,125,533.


Breaking into Sydney’s property market comfortably requires a combined household annual income of $182,000, which, for many, defies the conventional. It makes investing in property challenging in the short term, with long-term investment where it’s at.


According to Brad Wearne from Meridian Australia, it all depends on when you purchase on the property cycle.


“Now might be a great time for you to buy if you have a stable income and time on your side. Australia has strong economic growth with solid employment figures, forming a concrete base for the future property market.”


But for those sitting on the fence, with an unsteady income or who are experiencing major life changes like marriage, a growing family or upcoming retirement, the decision to invest in property in Sydney could be detrimental. “Investors risk stretching cashflow too thin, compromising their lifestyle merely for a foothold in the Sydney market”, he explained.


Growth illusions

Past investment successes don’t always guarantee future successes. Sydney’s historical growth may not reflect today’s reality, with more flexible working conditions and the promise of a better lifestyle coaxing many to begin a new life out of the hustle and bustle and large price tags. It’s time to consider alternatives promising growth and sustainable returns.

Brad believes diversification is the linchpin of successful investing.

“Rather than facing an uphill battle in Sydney, exploring opportunities in diverse locations mitigates risks and opens avenues to invest in sustainable portfolio growth,” he says.


Opportunity beyond the razzle-dazzle/bright lights

As captivating as Sydney may be, other Australian cities and regions have emerged, offering both affordability and growth potential. Perth’s recent economic surge and Brisbane’s steady rise beckon as excellent frontrunners outside of Sydney.


Brad suggests being curious. “Start looking outside the box, consider the alternatives with an open mind and be ready to explore and diversify your portfolio confidently.”

Based on a range of criteria, both Perth and Brisbane are tipped to spearhead an investment boom outside of Sydney. Key elements include affordability when compared to neighbouring suburbs, local amenities and social venues, appeal to families and general location to major business hubs and lifestyle activities. 

He also noted a shift in demographics in both major cities with long-term elderly residents now downsizing and being replaced with young families is also becoming more common.

There’s no doubt that historically, the draw to Sydney as an investment mecca is undeniable, but strategy and opportunity are key. Sydney’s glittering façade might be just that.


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