Home Vs Investment Property in the Current Climate

Hi all,

I’m new to investing (and this forum) and am sure this topic has been discussed before but I think my query has a slightly different twist on it so I will explain my situation first. I am currently renting in Sydney and would like to buy a PPOR, however my gut feeling is not to buy a PPOR right now as prices are dropping. I do have a property overseas and would sell that to buy a PPOR in Sydney. Selling the overseas property would give me approximately 66% of the value of the property I would hope to buy in Sydney.

I am also considering buying an IP in Australia but not in Sydney (possibly Brisbane). I would only buy an IP if it returned a positive cash flow, capital growth would be great but a secondary consideration. I have cash in Australia to fund the IP purchase.

My questions are these:
– Given the above scenario in terms of Sydney prices dropping and the fact that I have a lump sum to put towards the PPOR, does buying an IP first make sense? I ask this question partly because if it went according to plan I would end up with an IP but also a PPOR that has an outstanding mortgage so I’m wondering if all my money (including my Australia cash) should be held to buy my PPOR. I don’t think this makes complete sense as I might never by an IP if I want all of my PPOR mortgage to be paid off first.
– Does it make sense to buy an IP right now at all? I ask this as I read the US Fed plans to increase rates 3 times this year and 3 times next year. Nothing is guaranteed of course but if this does happen rates should rise in Australia. The fall out and potential restricted lending from the banking royal commission also needs to be considered in terms of how prices might be affected. So while income to house price and rent to house price might be more stable in Brisbane (when compared to Sydney), could issues such as these result in a drop in prices country-wide and not just Sydney? I know nobody has a crystal ball but I would just like people’s opinions, given that we’re at the top of a cycle, if buying an IP now sounds like a crazy idea!