The future of Australia's real estate "looks rosy", according to LJ Hooker managing director Warren McCarthy, who believes the inner-city Sydney apartment market is set to deliver strong returns to long-term investors.
"While Sydney's CBD isn't immune to market sentiment, we're still seeing fairly strong buyer interest in inner city apartments, from both property investors and owner-occupiers," McCarthy said.
"The tightening of the rental market in Sydney has also pushed weekly rents up, making it an easier transition for renters who are looking to become first homebuyers. The gap between monthly rental payments and monthly mortgage payments is becoming less, so paying a mortgage makes more sense to many who are yet to get into the market."
McCarthy pointed to strong and increasing yields in the inner city as a major draw for investors, with one-bedroom or studio apartments in the sub-$400,000 range renting at $450-500 per week.
In the southern part of Sydney's CBD several residential apartment developments have gone up in recent years, including World Square, Lumiere, Meriton Mosaic and the soon-to-be-completed Aspect, which has increased the residential population in the area, triggering improved infrastructure and facilities, McCarthy said.
The market is also being driven by cashed-up Baby Boomers, including some who are parents purchasing inner-city abodes for their children to live in.
"With the southern CBD's proximity to the universities and colleges, this is a very attractive option to parents looking for accommodation for their children. Residents don't have to spend hours commuting to and from work each day, which is becoming more and more of an issue for Sydney residents living in the suburbs," he said.
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