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A property investment company has released a report that says the Sydney market has reached the top of its cycle and investors should look for opportunities in other capital cities

NEW RESEARCH conducted by investment specialists Momentum Wealth has concluded that Sydney’s property growth has passed its peak and investors would be better off investing elsewhere. Looking to other state capitals that are earlier in their growth cycle would be the best strategy, the research suggests, as the Harbour City is cooling and short-term growth prospects are waning.

Sydney’s median house price has increased by an alarming 46.7% since the start of the current upcycle in January 2012, and the average price is currently sitting at about $880,000.

The research report, Property Market Spotlight: Sydney, examines the city’s key demand and supply indicators and concludes that conditions are easing as a well-publicised apartment oversupply looms. “It can be acutely detrimental to buy at the peak of a market upcycle as the ensuing downturn can have a severe setback on investors’ finances and investment goals,” Momentum Wealth managing director Damian Collins said.

“While it’s impossible to predict how much longer Sydney’s upcycle will continue, our research report highlights an easing in several key market indicators suggesting the strongest capital growth in the current upcycle has passed.”

The research report reveals that properties are now taking longer to sell, the number of properties selling has dropped, and dwelling approvals have plateaued at record levels, which indicates that the Sydney market is running out of steam.

The NSW capital’s lack of affordability is also a factor that is pricing some buyers out of the market, the report says, while the threat of an oversupply of apartments looms in some inner-city locations. Both factors are likely to weigh on short-to-medium term capital growth prospects.

“While the long-term outlook for the Sydney property market remains positive, the short-to-medium term view isn’t as rosy,” said Collins, adding that investing in a city in the earlier stages of its growth cycle would be a smarter move.

“The research report explains that investors considering the Sydney market are likely to be better off looking at other Australian capital cities that are earlier in their growth cycle, are more affordable and offer higher yields.

“While Sydney’s time will come again, for the time being better investments can be made elsewhere,” he said.