Did you know what the median house price in Sydney was a decade ago?
Well, it was about $640,000 and had been hovering around that level for a few years.
Buyers agents started buying in the Harbour City back then because they knew the fundamentals that drive market upswings were well under way.
By 2012, Sydney property prices were rising and continued to do so for five years, before taking a breather for a year or two and started to increase again last year.
Now, the reason for this history lesson is not to sing the praises of Sydney over anywhere else, because we usually buy in locations that offer property price growth projections more affordably.
It is to highlight the equity that many medium-term homeowners in Sydney probably have available to them to invest.
Over the past decade, the Sydney median house price has increased by 78 per cent, and that means many homeowners now have hundreds of thousands of dollars of equity in their properties.
The key, of course, is to not to just let it sit there under-utilised, because it can be reused for wealth creation purposes.
One of the first questions we ask new clients is how much they have available to invest in property.
Sometimes, people don’t understand the funds they truly have available because they believe they have to come up with cash for a property deposit.
Often, though, it turns out they have the equity in their homes that they can reuse to improve their financial futures.
One of the keys to our property investment strategy is its affordability with investors generally only needing about $80,000 in funds to buy a house in a location primed for capital growth in the future.
We buy for clients in capital city and major regional locations around the nation, where the market fundamentals are showing promising signs.
This means that $80,000 goes a lot further than it would in Sydney, where it wouldn’t even be enough to invest in an inferior unit 50 kilometres from the city!
However, by buying in strategic locations that are also more affordable, investors can secure houses on generous blocks of land as well as ones with strong cash flow for as little as $400,000.
On top of that, the low interest rate environment means that investors buying into affordable locations, such as Greater Brisbane, where the rental market is also firing, are finding that their property is neutral or even positive cash flow from the outset.
Circling back to my Sydney story at the start, it’s clear that homeowners with holdings in the New South Wales capital – or elsewhere around the state and nation – are well-placed to create wealth in the years ahead.
The key is to recognise the opportunity they already have to recycle a small proportion of their equity into another income- and capital growth-producing asset.