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What to buy and where: How to prepare for possible negative gearing changes if you’re an investor

Prepare for Possible Negative Gearing Changes - Investors Advisors

Investors are now back in the market, looking for good buys before the proposed changes to negative gearing and capital gains tax come in from January 1 if Labor wins the next federal election.

What type of home in Sydney is likely to bring the best returns? And where? And when?

Now is a good time to snap up an investment property, suggests Domain economist Trent Wiltshire.

“Prices may fall a little more but then the market will bottom out in late 2019,” he says. “The lending environment is easing a bit so banks are offering better deals.

“Consumer surveys also show people are thinking now is a good time to buy, with signs the market is turning around.”

The Sydney suburb of South Coogee Prepare for Possible Negative Gearing Changes - Investors Advisors
Prestige investment pockets, like Sydney’s eastern beaches, are often a good bet. Photo: Steven Woodburn

Sydney’s popular blue-chip investment areas – the eastern beaches like Coogee and Bondi, the lower north shore with Neutral Bay and Kirribilli, and the inner west including Annandale and Balmain – can be the best bet, believes Chris Gray, chief executive of Your Empire.

“For the best capital growth and rental returns, you need to stay within five to 15 kilometres of the centre, in areas that are short of supply but always high in demand,” he says.

“Also, try to buy a property that’s priced around the median as the majority of renters, and later buyers, can afford that.

“For apartments, choose a two-bedroom apartment with parking and nice-sized rooms, and if you want to buy a house, you’ll have to spend more money to buy in those blue-chip areas.”

26/293 Alison Road, Coogee. Photo: BresicWhitney Rosebery Prepare for Possible Negative Gearing Changes - Investors Advisors
Chris Gray, chief executive of Your Empire, recommends looking at two-bedroom apartments. Photo: BresicWhitney

New developments can also be a good buy now, with finance tight for developers and many offering discounts, says Loanmarket East director Alex Lambros.

“Rental returns will be stronger [near the CBD],” he says. “Choose something close to transport and in smaller buildings of 50 units or less.”

On the lower north shore, Olivia Chung of McGrath Neutral Bay favours older-style apartments or houses for investment: “Choose a two-bedroom apartment with parking and a balcony as demand will be higher and they offer the highest yield and capital growth.”

“Choose [a house] that’s already renovated as they can offer a better return straight away,” she says.

Surry Hills in Sydney Prepare for Possible Negative Gearing Changes - Investors Advisors
Terrace houses around Surry Hills and Paddington are also worth considering. Photo: Steven Woodburn

In the inner west, two-bedroom terraces can be a great choice, according to Matt Hayson, director of Cobden & Hayson.

“They rent well to singles, professional couples and downsizers, particularly if they have the right aspect with a north or north-east-facing rear,” he says.

In the east, terraces around Paddington or Surry Hills can be a good bet too, says Tony Laing of The Agency Eastern Suburbs.

Apartments in smaller blocks with fewer amenities and therefore lower levies are a good idea. “They mean you don’t have as much land tax or other maintenance costs,” he says.

Four investments to check out

26/293 Alison Road, Coogee

26/293 Alison Road, Coogee. Photo: BresicWhitney Rosebery Prepare for Possible Negative Gearing Changes - Investors Advisors
26/293 Alison Road, Coogee NSW.

This new, north-facing penthouse in a boutique block is likely to offer a great yield, says agent Charles Touma of BresicWhitney Rosebery, who is selling the property with a $1.4 million guide.

“I’ve already rented 16 apartments in that building and they [are] all getting a good rent of about $1000. And since this is a penthouse, it will get even more because of its size, its outlook and its amazing balcony.”

Only 750 metres to the beach, the penthouse has a large terrace, leafy views, open-plan living and a gas kitchen with stone benches.

20 Alfred Street, Annandale

20 Alfred Street Annandale NSW Low res Prepare for Possible Negative Gearing Changes - Investors Advisors
20 Alfred Street, Annandale NSW.

This is a classic two-bedroom terrace and a great investment opportunity in a leafy street in a very desirable area of the inner west.

It has character features like period fireplaces, ornate ceilings and timber floorboards, but its kitchen and bathroom have both undergone a good quality renovation and the courtyard has entertaining space as well as rear car access.

It’s for sale with a price guide of $1,095,000 via agent Ray White Annandale agent Tina O’Connor.

G01/562a-564 Miller Street, Cammeray

G01.562a-564 Miller Street Cammeray NSW Low res
G01.562a-564 Miller Street, Cammeray NSW.

A two-bedroom, two-bathroom-plus-study apartment in the new block Aleuca is close to complete close to the cafes and restaurants of the local village, but in a bush setting.

With big bedrooms and a study in the second bedroom, the 113sqm home has a designer kitchen with Caesarstone bench-tops, feature timber finishes, Spotted Gum floorboards and one security parking spot.

Ray White Lower North Shore agent Justin Kurenda is selling the apartment for $1.85 million.  

83 Garden Street, Maroubra

83 Garden Street Maroubra NSW Low res Prepare for Possible Negative Gearing Changes - Investors Advisors
83 Garden Street, Maroubra NSW.

This four-bedroom freestanding house is on 363sqm of land and offers plenty of opportunities to renovate for instant leasing, and then more extensive work later, including permission for a two-storey home, to add extra capital value.

It’s in a corner position in a popular spot just minutes from Maroubra Junction shopping precinct, with a variety of stores, cafes and restaurants, and transport.

There’s also an enclosed back veranda for more room, and a lock-up garage. It’s for sale for $1,575,000 through agent Veronica Perez of PRDnationwide Perez Real Estate.  

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