Sydney property investors are better off looking to other state capitals that are earlier in their growth cycle as the Harbour City cools and short-term growth prospects wane, according to a new research report.

Sydney’s median house price has increased an eye watering 46.7% since the start of the current upcycle in January 2012 to about $880,000. However, the days of the city’s stellar growth run are numbered, according to a new research report from property investment advisor Momentum Wealth.

The research report, Property Market Spotlight: Sydney, examined the city’s key demand and supply indicators and found that conditions were easing as a well-publicised apartment oversupply loomed.

“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 the Sydney market is running out of steam.

The capital city is also suffering extreme affordability issues, which is pricing some buyers out of the market, while the threat of an oversupply of apartments looms in some specific locations – both factors are likely to weigh on short-to-medium term capital growth prospects, according to the research report.

“While the long-term outlook for the Sydney property market remains positive, the short-to-medium term view isn’t as rosy,” Mr Collins said.

“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.

See also:

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Four reasons to buy in a cool market

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