Continued border closures allow local apartment buyers a time limited opportunity: John McGrath

The east coast capital cities will inevitably rise again, John McGrath forecasts

Continued border closures allow local apartment buyers a time limited opportunity: John McGrath
Continued border closures allow local apartment buyers a time limited opportunity: John McGrath

Local owner occupiers and investors have a time-limited opportunity to use the advantage of closed borders to buy well, according to veteran agent John McGrath.

They can do so "before life returns to normal and we see an anticipated uplift in both rental and capital values across our inner cities."

His annual McGrath report pinpointed the buying opportunity. 

"The east coast capital cities will inevitably rise again," McGrath said.

"Sydney and Melbourne are established international cities and Brisbane will receive global attention as host of the 2032 Olympics.

"With the Federal Government’s four-phase plan, Australia is working towards an 80% vaccination rate, an end to lockdowns and a reopened international border.

"Business will come back to the CBD, nightlife will resume and people will once again want to live in the inner city, just as they are now in the reopened U.S., U.K. and Europe," he said.

The report advised Sydney’s gross apartment yield is 3.1%, Melbourne 3.5% and Brisbane 5.1%.

"Traditionally, inner city markets are considered blue chip and are usually in high demand.

"Today, local buyers have little competition from overseas buyers and new immigrants, with Australia’s international border currently expected to remain shut until 2022, so, savvy first movers are seizing the opportunity to snap up inner city apartments.

"First home buyer activity is still above average but starting to decline due to affordability constraints and the end of extra government stimulus. 

"In their place are returning investors, who are looking past the short term issues of higher vacancies and lower yields to the future when the international border is reopened and massive tenant demand will return." he said.

He noted the pandemic’s impact had extended beyond the CBDs to inner ring suburbs within a 10km radius.

"There is even better value available here. 

"Prices have either fallen or stayed much the same whilst values across the rest of the city have gone up.

"Today’s investors have a rare chance to buy positively geared or cash flow investments when the amount earned from a property exceeds the expenses.

"It is typically achieved after years of paying down the loan to bring the ownership costs below the rental returns," McGrath said.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?