Sydney property investors better off elsewhere as strongest growth has passed

Sydney property investors are better off looking to other state capitals that are earlier in their growth cycle, according to a new research report.

The report by investment advisor Momentum Wealth suggests the days of stellar growth are numbered after Sydney's median house price rocketed.

It has increased 46.7 percent since the start of the current upcycle in January 2012. It now stands at around $880,000

Short-term growth prospects are waning in the Sydney market according to the research report, Property Market Spotlight: Sydney.

It examined the city’s key demand and supply indicators and found that conditions were easing as a well-publicised apartment oversupply loomed.

Properties are now taking longer to sell, according to the report. The number of properties selling has dropped and dwelling approvals have plateaued at record levels.

“It can be acutely detrimental to buy at the peak of a market upcycle as the ensuing downturn can have a severe setback on investors’ finances and investment goals,” Momentum Wealth managing director Damian Collins said.

“While it’s impossible to predict how much longer Sydney’s upcycle will continue, our research report highlights an easing in several key market indicators suggesting the strongest capital growth in the current upcycle has passed.”

Some buyers are being priced out of the market due to the extreme affordability problems.

The threat of an apartment oversupply continues to be at the forefront of the property market conversation.

The research report suggests both of these factors will weigh on short to medium term capital growth prospects.

“While the long-term outlook for the Sydney property market remains positive, the short-to-medium term view isn’t as rosy,” Collins said.

“The research report explains that investors considering the Sydney market are likely to be better off looking at other Australian capital cities that are earlier in their growth cycle, are more affordable and offer higher yields.”

“While Sydney’s time will come again, for the time being better investments can be made elsewhere,” he said.