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13,000 new homes planned for Sydney

N.S.W. Premier Barry O’Farrell has announced 13,000 new homes will be built in Sydney’s major growth corridors, saying home ownership should be within the reach of young families.

10,000 of these homes will be built in Sydney’s northwest with another 3000 in the southwest of Sydney.

“Home ownership in Sydney remains a dream for many young families – my government will build the homes Labor failed to provide and ensure residents have jobs and services on their doorstep,” said Mr O’Farrell.

In the northwest the plan is for the 1,800 hectare site at Marsden  to contain 10,000 medium density homes with building is expected to start in about two years

The N.S.W. government is also in the process of accelerating land release at Catherine Field, in Sydney’s southwest which will have the capacity for around 3000 new dwellings.

While these may be growth corridors with “physical growth” – lots of new houses, if history repeats itself, and it usually does, these will not be the right place for property investment

I know some investors buy house and land packages because they’ve heard that land appreciates in value. But when you think about it, when buying this type of property usually the land accounts for less than half the purchase price, giving these properties a very low land to asset ratio.

While they may be great places to bring up a family, in general new or outer suburbs are not good places to invest. Residents in these areas tend to have less disposable income than people who live in more affluent suburbs which means that these areas suffer most in tough times or when interest rates rise.

Remember…one of the big factors that enhances capital growth is scarcity and that’s something missing in these new suburbs. Many properties look the same, and there’s always another estate with more similar houses and more land just across the road.

Another reason I would avoid investing in these areas is their demographics, as they don’t attract the same demand from a diversity of tenants as the inner and middle ring suburbs do.



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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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