Too late to buy Sydney - try Wollongong or Dubbo, Tamworth and Gunnedah, and Newcastle

I’d rather be a seller than a buyer in Sydney in 2014. That’s my general response to a frequently-asked question: is it too late to buy in Sydney?

The time to buy in Sydney to achieve maximum gain from the recent recovery was late in 2012. Most of the Sydney locations I was recommending back then have experienced capital growth between 15% and 20% in the past 12 months. That won’t be repeated in the next year, although there will be further growth.

Some commentators have sought media profile by making the absurd statement that “the property boom is over”.

It has a similar ring to the declaration in mid-2013 that “the resources boom is over”. A year later we still have projects worth around $250 billion under construction, with major new ones (like the $9 billion Roy Hill mine and Galilee Basin projects totalling $30 billion) just getting under way, but if it makes a headline no one seems to care too much about balance or accuracy.

The claim that the “the property boom is over” is equally flimsy and made for the same shallow reason: short-term publicity and the truth be damned.

Sydney’s boom is unlikely to retain the heights of 2013 but growth continues. Melbourne is yet to reach the levels of Sydney. Brisbane and Adelaide are just getting started and are likely to feature among the growth leaders by the end of the year. Perth still has momentum and Hobart, following the election of a new state government, is set for its best year in a long time.

The thing about Sydney is that it’s a very big city, with 700-plus suburbs. There are many locations with activity created by local reasons, rather than city-wide momentum. There will be ongoing growth in specific locations for specific reasons, most of them related to transport infrastructure.

There will investment opportunities from the Badgerys Creek airport, once definitive information about flight paths and infrastructure location is known. The North West Rail Link is advancing, with impacts on real estate along its route to Rouse Hill. Ditto the South West Rail Link. WestConnex will be another game-changer, impacting suburbs such as Westmead.

So the secret to finding further growth in Sydney is to follow the infrastructure trail.

Beyond that, investors can profit by looking outside Sydney to regional New South Wales. When capital cities boom, there is often a ripple effect out to the regions. Two cities not far from Sydney, and advancing for local reasons also, are Wollongong and Newcastle.

Wollongong has defied predictions that it would lapse into recession following economic reversals such as downsizing by Bluescope Steel. One hysterical headline suggested property values would fall 50%. But the Illawarra is the latest example of a regional community fighting back from adverse circumstances. A lot of infrastructure and property development money is pumping into Wollongong and real estate markets are rising.

Others to watch include Dubbo, Tamworth and Gunnedah, as well as Newcastle - which continues to be one of Australia’s most under-rated cities and property markets.

You can contact Terry via   email or on Twitter.

Image courtesy of Wikipedia/Creative Commons.