Sydney’s great beaches and wonderful weather aren’t the only reasons it’s hard to say farewell to the Harbour City – the red hot real estate market also keeps people hanging on even when they want to leave.
For the same reasons some struggle to get onto the Sydney property ladder, with skyrocketing prices, high stamp duty and fierce competition, it’s also a challenge for those already in the market to get out, especially if there is a chance they might want back in.
Auctioneer Damien Cooley says while some Sydney residents hold onto the pipe dream of cashing in on a lucrative market (one that jumped almost 13 per cent year on year in August according to CoreLogic) and taking their dollars away for a sea or tree change, he urges homeowners to consider the real cost of selling out of Sydney.
“Ok, so you’ve done very well out of your property and, yes, you could sell it and make really good money. And if it’s been your principal place of residence you won’t pay much tax. However, if you think one day you might move back and you’ve sold your property, then what are you going to do?” he says.
“We’re not sure what the market is going to do in the near future and while we’re not expecting the market to run away, things will have shifted,” he explains.
While job opportunities, family commitments, or just the desire to dip out of the rat race for a while may be enough motivation to leave Sydney, Cooley says the strong market means getting back in after a change of heart could be an extremely costly exercise.
“If you come back to Sydney you’re going to want to buy something similar to what you now have, maybe something better. So if you sell your home for, say, $2 million then by the time you come back you might need to spend $3 million,” he says.
Cooley points out that the stamp duty alone on the new purchase would be more than $150,000, not to mention other significant transaction costs.
“But if you’re sure you’re not coming back to Sydney then you can be confident enough to sell up, take that money and buy something elsewhere which will be the family home.”
Many Sydneysiders working hard to pay off a hefty home loan might dream of being mortgage free, however Cooley says there is an alternative to completely cashing in.
“If you do decide to sell your Sydney home, and if you can afford it, then consider buying a one or two bedroom unit in Sydney so you’ve still got a foothold in the market and make it an investment property.”
He says if there is the slightest doubt that the call of the Harbour City could lure you back then don’t take the risk.
“If you don’t have to sell, then don’t sell. Your initial reaction might be to take the money and run, but what is the cost if you decide to return?”