Should you really invest in Sydney?

For starters, he considered that “there is a cash flow element there, which is quite negative compared to other markets around Australia”.

“You need to ask yourself the question: Where is my money going to work hardest for me? And what can I afford?”

With market rebounds already being witnessed within Sydney and Melbourne, Mr Waters advised people to be looking at the “right here, right now”.

“If you were to purchase in Sydney, I think you need to establish what you can afford,” he said.

“Forget the purchase price for the minute,” the real estate agent and property strategist continued.

Instead, investors and would-be investors should be looking to “what you can afford out of your household budget to sustain the mortgage”.

This is because there’s “some competition out there” now with individuals who are rent-vesting gaining momentum in the market.

In some cases, Mr Waters conceded that it’s even “cheaper to own it than it is to rent it because there’s some value combined with the low interest rate environment”.

But the real reason Mr Waters said he doesn’t believe investing in Sydney is for everybody is because of the mere fact that “it’s technically easier today” to hold property.

“It’s not today, but it’s tomorrow or next year when rates start to turn around and get back to normality” and create issues for investors in the local market.

Conceding that the other side of the interest argument does lend itself to tipping towards an undersupplied market as the DA pipeline dries up, Mr Waters did acknowledge that some areas may see “rents run rampant again”.

However, “if you’re absolutely banking on the fact that you need rents to go up to be able to support [your investment property], I don’t think Sydney’s your market,” he offered.

And for those investors who are still interested in investing in Sydney and also have the means, Mr Waters reflected on his own position to advise that he, personally, “would be looking at something for an add value – which builds in some mitigation”.

“And in a perfect world, I’d love to be able to add a secondary income just in case rates go up – which they will – because I want to be optimistically cautious moving forward,” he added.

“And I want options.”

Smart Property Investment has previously looked at how investors can navigate Sydney’s “confusing” and “tight” property market.