Sydney to see extra 63,000 first homebuyers by April

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A staggering number of aspiring home owners are expected to storm into Sydney's property market over the next few months to take advantage of the government incentives, according to an expert.

Mark Mendel, CEO of property research portal Find Investment Property, predicted that 63,000 additional households across Sydney could be actively seeking their first home by April 2009 as it becomes cheaper to buy than rent.

"These new buyers will cause the property market to not only stabilise but ensure some growth at the bottom and middle of the market. This may result in the start of the next property boom for Sydney which could be driven from the bottom up this time around, rather than the top of the market pulling the bottom up, which occurred during the early 2000s," said Mendel.

With median property prices expected to rise, Mendel said rents should start to ease off as more people are buying rather than renting. While this may result in a slight drop in vacancy rates, rental yields remain promising.
 
"Investors may see a halt in rapidly increasing rental returns, but this is ok as they are already high. However, property prices should rise, and investors should see sufficient capital growth over the next three to five years.

"An outside influence that may affect the property market is the growing unemployment rate. If the government is able to keep this at a reasonable level and continue to stimulate the economy, then we should see some great returns, going forward."

Many investors are now achieving after-tax cash flow neutral or positive returns on their real estate investment, making it a simple decision to invest for any direct property investors who have a small deposit or equity in another property.

"We arrived at the 63,000 figure by calculating the current percentage of people renting in Sydney whose rent will become more than the average mortgage repayment after the latest rate cut. With over 450,000 households currently renting in Sydney (ABS Census 2006), it's likely that 7% on either side of the median rental market may look to move into the market. Therefore, 14% of the rental market may look to purchase property -- 14% of 450,000 is 63,000," said Mendel.

 

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