The Australian property boom is over…but here’s where you can find bargains.
- The best suburbs in Australia to invest in property revealed – where owners can expect good growth despite prices slowing down
- House prices are stabilising after months of exceptional price growth, especially in Sydney
- Where do the good deals exist for the housing market?
- Worst capital cities to invest revealed.
Australian home prices are returning to earth.
With the market cooling down, it has now become even more important for the property investor who wants a good return to find out the best places to invest in. This blog post aims to provide some of these insights.
While the overall market will grow slowly and even experience a price drop, there are suburbs that are projected to maintain growth as high as 12 per cent.
The property investing axiom of ‘location is everything’ will hold true in a market slowdown. Here, we reveal the suburbs forecasted to grow the most, based on an Australian Financial Review analysis.
Victoria
Is the best state positioned for growth in the 2016. There are several suburbs forecasted for double digit growth in the state.
Many of them projected for strong growth are in the inner eastern suburbs, including Glen Waverley, Mount Waverley, Balwyn, and Doncaster East. Balwyn is also mentioned as a top five suburbs to invest. The median price for a house in Balwyn, a suburb in Melbourne’s inner east, is $1.85 million.
Industry insiders say that buying in these suburbs has remained strong from first home buyers and prestige home buyers. Prices are expected to continue rising in 2016 in these areas.
New South Wales
Sydney has experienced a spike in prices in the past few years. Thankfully if you are looking to get into the market, there has been a dramatic slowdown in price increases since the middle of last year.
At the same time, key suburbs in Sydney and several other areas in NSW are still expected to experience good price growth in the coming 12 months.
The north coast town of Byron Bay is expected to be among the top performers, with growth of 12 per cent forecasted. Other top areas include the Sydney suburbs of Bondi Junction, where growth is expected to be 9 per cent, Dulwich Hill (9 per cent), Rushcutters Bay (9 per cent) and Schofields (8 per cent).
Dulwich Hill offers the best growth prospect in Sydney, 9 per cent growth on a median house price of $1.265 million expected. In comparison, Byron Bay’s has a median house price of $910,000.
Experts say exclusive ‘trophy houses’ will continue to be in demand for the high end of the market, but prices are expected to be lower in 2016 compared to 2015.
Australian Capital Territory
ACT is not expected to get the same growth this year compared to NSW and VIC, however, there are still some Canberra suburbs where good growth is expected.
The five suburbs expected to have the best growth fare Weston, Chapman and Wright (7 per cent growth forecast), and Garran and Rivett (both 6 per cent growth forecast).
Canberra had the nation’s highest auction clearance rates for the 12 months to the end of October 2015, and overall had a median house price gain of 8%.26
Queensland
Brisbane experienced an oversupply of apartments in the inner city suburbs, which resulted in slower growth. Outer city suburbs in Logan and Ipswich experienced better growth.
However the best performing areas in 2015 were Cairns and the Gold Coast, as retirees flocked from southern states to these sunshine areas.
Growth in the retiree areas of Queensland are therefore expected to continue growing in 2016.
The top five suburbs for growth in 2016 are Mermaid Beach, Burleigh Waters, Hollywell and Runaway Bay on the Gold Coast (at 8 per cent growth rate), and Mooroobool in Cairns (also 8 per cent).
South Australia
South Australia is experiencing economic problems with downturns in the mining and manufacturing sectors. This is having an impact on the property market.
Yet, there are still properties in some areas that are expected to achieve reasonable growth in 2016.
Broadview in Adelaide, along with West Lakes, Magill, Parkside and Beaumont are expected to achieve 6% growth in 2016.
Western Australia
In general, the prospect for growth is gloomy for Western Australia’s property sector with housing price growth severely impacted by the end of the mining boom.
The best suburbs are Coolbellup, Rockingham, Highgate, Pinjarra and Aubin Grove in Perth, which are all forecast to gain a mere 3 per cent growth in the next 12 months.
Some forecast that median prices may actually fall in 2016, but most expect better growth ahead in 2017.
Northern Territory
NT’s property market is in a downturn due to the end of the mining boom. Slow growth is expected in the coming 18 months.
If you own properties in the suburbs of Nightcliff, Stuart Park, Muirhead and Larrakeyah, you will probably experience the best growth in 2016 of 4%.
In general, don’t expect good growth in NT until 2018 as prices overall are yet to correct from the mining boom.
Tasmania
Some good news for Tasmanian property investors: Hobart remains one of the hardest places to find a property to rent, with vacancy rates sitting lower than 1%.
The best areas to look for growth in 2016 are Primrose Sands, Smithon, Hadspen and Taroona. All these suburbs are expected to growth around 5% this year.
Taroona, with a median house price of over $500,000 is one of the most expensive suburbs in Hobart, but is still positioned to enjoy moderate growth.
Conclusion
Property investors cannot expect the stellar growth of the past few years as the market has probably been overheated with a combination of speculation, low interest rates and the mining boom. 2016 has seen a further slowdown in the mining sector and bank lending tightening. These are negative factors for growth.
The good news for property investors is that the slowdown means better buying opportunities; and if you select the right properties in good locations, you could still stand to gain much wealth and equity in the coming few years.
To find out more about where our in-house research believes are the top 9 suburbs for unit growth in 2016 and beyond, click the image below to download your free report.
