Get ready to grab that perfect property investment opportunity with our guide to the latest market movements across the country.
In the last five years to May 2016, investors across Australia have enjoyed an average 57.8% overall return on their properties. That figure includes income from rental and capital growth and is based on property data across all eight capitals.
Comparing these gains to the record lows in interest rates in recent years, it’s no wonder property continues to attract new investors. But can rookies entering the market for the first time look forward to similar returns in years to come? If they want to stay one step ahead of the market, where should they be looking to buy?
Rents declining, capital growth is key
With rental rates across Australia continuing to fall during July, it might not seem like the right time to be getting into property. But thanks to continuing growth in median property values in four of the eight capitals, new investors can still count on healthy returns if they choose the right property in areas on the rise.
City highs and lows
The general picture across the eight major cities at the end of the 2015/16 financial year was of slower rates of growth for most markets, with a particularly gloomy outlook for Perth and Darwin thanks to the change in the fortunes of the mining industry. The first month of the new financial year has shown this downward trend continuing with a 0.91% fall in month-on-month property values in Perth and a 6.18% drop for Darwin.
Focus on the Southern states
Melbourne and Sydney are continuing to record modest growth in values, with house values rising faster than units month on month. But looking further south, it’s the unit markets in Adelaide and Hobart that could be showing the most promise for property investors.
Unit values in Adelaide rose 3.6% month-on-month to the end of July, with a 1.57% increase in Hobart unit prices, taking the overall annual increase for the Tasmanian capital to 12.9%. But add to this the fact that Hobart is the only Australian city to have recorded an annual double-digit increase in unit rental rates of 14.2% (compared with 2.4% for Canberra, 2.3% for Sydney, 1.6% for Melbourne and falling rents for all other cities) and it’s starting to look like a clear winner for a successful property investment.
But Adelaide could still be one to watch. Having only recorded a total increase in median unit values of 2.63% over the year to 31 July, that recent month on month rise of 3.6% could indicate the start of a major growth cycle in this city, bringing some healthy capital gains to investors.
Are you planning on buying an investment property? Which cities and regions are you looking at for your first purchase?