Investors must 'move past' Sydney: adviser

“Our research tells us very clearly what some investors already suspect and others do not: there’s too much heat in the Sydney property market at the moment, making it difficult to negotiate favourable terms or pricing,” he said.

Mr Smoli believes that more people are being pushed out of the market by rising prices, particularly in the inner city.

“A borrowing capacity of at least $500,000 is required for the purchase of a one-bedroom apartment, while for two bedrooms the investor is looking at closer to $950,000,” he said.

“This in its own right creates a high barrier for entry and is unaffordable for most.

The more cash is required to secure an asset, the less diversity an investor is likely to have in their portfolio, Mr Smoli warned.

“From a risk mitigation perspective, the more prudent course of action would be to purchase two properties in different cities to avoid concentration risk,” he said.

Overall, he suggested investors buying into Sydney at present are likely to overpay and miss out on better opportunities.

“These investors risk a scenario of no equity growth, or even negative equity, in the three- to five-year short term,” he said.

He recommended investors look to other capital cities for opportunities, particularly Brisbane.

“New projects in and around Brisbane CBD have the potential to alter the prevailing tenant demographic,” he said.

“Leveraging its competitive base of high levels of business investment and innovation, coupled with the largest public infrastructure spending program ever to be undertaken within Australia, Queensland – and Brisbane in particular – is in a prime position to benefit from strong economic growth.

“This will continue to drive demand for residential dwellings in what for the most part is an undersupplied market.”