Real Estate and Getting Back to Sydney

Question

One thing that worries us about any move from Sydney is the fear that we will not be able to come back again simply because we will never be able to afford to buy here again. Worried professional, Balmain.

Answer

The starting point here is to do some research so that you know what your options are. For example, do you hold and rent the Sydney property, sell it and buy in the place you are going to, sell it and reinvest in part in Sydney, in part elsewhere?

The regional real estate marketplace is very diverse, just as diverse if not more so than Sydney.

In general, house prices are lower then Sydney, blocks often bigger. So it's possible to get a much bigger place with the same money. Things such as swimming pools or even tennis courts can be added. The real risk to avoid here is overcapitalisation, adding life style elements that cannot then be recovered from later sale.

It is also actually not true that Sydney real estate always appreciates faster than its country cousin in percentage terms, although the timing in appreciation cycles can be different. In regional NSW for example, country appreciation cycles often lag Sydney cycles. One reason for this is that Sydney money often goes bush once Sydney prices become too expensive and peak.

Another factor to consider is that the return on an investment property over time is a combination of rents and capital gains. Rental yield on regional properties are usually higher, often much higher, than the Sydney equivalent. This can make the apparently higher Sydney capital appreciation very misleading.

Because both rental and purchase markets vary so much across regional Australia, you do need to investigate. Do not, for example, buy something just because it appears incredibly cheap by Sydney standards. Sounds dumb, but a lot of people do.