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As we enter April, the Australian property market is about to enter an active investment cycle, with many property investors eager to enter the market. However, with such a vast Australian property market, how do you make a wise choice? How should I choose an Australian investment strategy? Among the real estate in the eight major cities, which one is worth investing in? If you only focus on one city or target one or two recent hot cities, you may miss out on better investment opportunities.
After researching nearly a hundred reports and related data on the market, my data analysis team and I have compiled this Australian property investment guide for the eight capital cities to help you make money. If you want to make money but don't know where to invest, there's no need to search for fragmented information everywhere. This article will meet all your needs.
Sydney Property Investment Strategy
Sydney Market Features
As of now, the median house price in Sydney is $1.139 million, making it the most expensive city in the country, with an annual growth rate of 9.6%. The latest data shows that current prices are only 1.4% lower than the peak reached during the Sydney lockdown, so new records are expected to be set soon.
With sellers returning to the market, the total number of properties listed for sale in Sydney is higher than the same period last year, but overall supply remains limited. Some buyers are becoming more cautious as their budgets tighten. However, the clearance rate in 2024 remains strong, which will support prices.
Sydney Investment Opportunities
Similar to Melbourne, the Sydney property market is not homogeneous. Due to the ongoing affordability crisis, buyers are seeking more affordable segments within the market. According to Corelogic statistics, 54% of non-detached residential properties in Sydney have seen price increases higher than detached houses, making the apartment market an area of interest for investors.
Among them, apartments in Inner West, Eastern Suburbs, and Lower North Shore have seen the largest increases. Clovelly apartments have risen by 7.9%, more than 6 times the rate of detached houses in the area. Strathfield South apartments have increased by over 9 times the rate of detached houses. Apartments in Greenwich, Dundas, Burwood, and Hurlstone Park have also increased by 6 times the rate of detached houses, while apartments in Bronte, Ashfield, and Willoughby have seen increases of over five times.
Melbourne Property Investment Strategy
Melbourne Market Features
In 2023, I predicted a turning point for Melbourne's property market in the channel. Apparently, Melbourne's property market has not performed as strongly as some other capital cities over the past year.
Currently, the median house price in Melbourne is $779,000, with an annual growth rate of 3.2%. Melbourne's auction market performed well last year, with a total of 41,302 houses auctioned, making it the busiest market among the eight capitals in 2023. The clearance rate was second only to Sydney and Adelaide, reaching 64.3%, higher than the 61.8% during 2022.
Melbourne Investment Opportunities
The relatively sluggish growth rate but highly active auction market in Melbourne may make investors hesitate, unsure if now is a good time to invest in the Melbourne property market. Investing cannot just look at the overall data of the city, but must delve deeper into different areas: Melbourne's real estate market is diversified, and in fact, in 2023, the house prices in several areas of Melbourne exceeded the national average price increase.
Areas worth noting include Fitzroy, Melbourne, with a growth of 16.4%, Burwood and Maribyrnong with a growth of 11.9%, Chadstone with a growth of 11.0%, and so on. Take a serious look at this table. These are not Melbourne's elite areas; the performance of the "internet celebrity areas" under discussion is disappointing, such as the sluggish housing market in Toorak and Brighton.
So, markets like Melbourne create opportunities for strategic real estate investors because some areas of Melbourne have huge potential for value appreciation, requiring you to have a pair of eyes to discover gold.
It is worth mentioning that Victoria's land tax system can be said to be the highest and most complex among the eight capitals, and the addition of a vacant property tax (specifically, you can watch my video "The Hidden Costs Behind Homeownership") has also made Victorian investors complain.
Recently, Victoria has issued a new policy: starting from May 1st, all residences must achieve a 7-star rating under the National Residential Energy Efficiency Scheme, which means energy savings can indeed reduce residents' expenses, but at the same time, this means that all builders must incorporate some standards, which may lead to an increase in construction costs for all residences by $10,000 to $20,000. On the one hand, it encourages potential buyers to sign construction contracts before May 1st to avoid price fluctuations, and on the other hand, the increase in construction costs will affect the supply of new homes. It seems that the Victorian government is playing chess again, what do you think?
Brisbane Property Investment Strategy
Brisbane Market Performance
As of April 1st, the median house price in Brisbane reached $817,000, with a year-on-year increase of 15.9%. As a perennial "runner-up" in various rankings, Brisbane's real estate market has surged during the pandemic, growing from a low to a peak by 55.2%, and prices are currently at a new high. Brisbane has never been a city that hosts many auctions, but the strong clearance rate indicates that the additional supply is struggling to meet the growing demand.
Brisbane Investment Opportunities
This may be good news for landlords, but Brisbane's rental market is facing a more challenging situation for tenants: the vacancy rate is approaching a historically low level, and rents are generally high—Brisbane's house vacancy rate is 0.9%, with rents rising by 9.3% over the past year; while the apartment vacancy rate is 1.0%, with rents rising by 24.8% over the past year.
The 2032 Olympics in Brisbane will bring greater pressure on property prices, and the government's demand for infrastructure and transportation upgrades in the lead-up to the Olympics will drive the development of Brisbane's real estate market.
The Alison team recommends focusing on the following areas: Macgegor became the best-performing suburb for houses in Brisbane in 2023, with a growth of 24.7%; Slacks Creek saw a 27.4% increase in apartment values; Moranbah has shown strong rental performance, with house rents rising by 20.5% and apartment rents rising by 19.6%.
Perth Property Investment Strategy
Perth Market Performance
Perth, with a median price of $703,000, has seen a 19.8% annual growth rate, which can be described as skyrocketing. Perth's real estate started a bit later than Brisbane's, initially being called the "second Brisbane" by investors. However, after market consolidation, Perth has surpassed Brisbane's momentum and become the top-performing city in the property market.
Perth properties are also the most frequently asked about by customers recently, with some customers buying two properties at once, and all done remotely. Because the listing quantity in Perth is also very tight, the average rent has reached $703 per week, indicating that Perth's market is equally challenging for both tenants and buyers—a situation of high demand and low supply.
Perth Investment Opportunities
It is expected that by 2036, Perth's population will grow to 3.5 million, accounting for 80% of Western Australia's growth rate, with a population growth rate of 1.7% expected for 2024-25. Strong population growth will keep the demand for housing sales and rentals in Perth stable in 2024.
Meanwhile, dominating a third of Australia's trade, the mining industry in Western Australia is globally competitive. To achieve industrial diversification, Western Australia has also supported industries such as tourism, livestock, soft skills, and AI in recent years. Therefore, the future development and economic prospects of Perth are immeasurable, and the volume of immigrant buyers will only increase.
In fact, the characteristic of Perth's real estate is that the low investment threshold and high-return investment opportunities are fleeting. Perth has many hidden investment areas to explore, and the Alison team will continue to search for high-quality properties to bring to you.
Adelaide Property Investment Strategy
Adelaide Market Performance
As of April 1st, the median price for properties in Adelaide is $734,000, with an annual growth rate of 13.3%. Adelaide has emerged as a new star in the real estate market in recent years, showing impressive performance. In 2023, Adelaide achieved an exceptionally high clearance rate of 73.9%, ranking first in Australia. This demonstrates the strength and depth of Adelaide's real estate market.
Despite starting later, several new suburbs in Adelaide joined the "million-dollar club" last year. As of December, the median prices in 12 areas, including Seacliff, Glenelg North, Glengowrie, Clarence Gardens, and North Brighton, all surpassed seven figures.
Adelaide Investment Opportunities
According to the latest results from the CommSec State of the States report for 2024, South Australia ranks first in the Australian economy. Its main advantages lie in the performance of the property market, the completion rate of builders, and the unemployment rate.
As the leading agricultural state in Australia, South Australia exports high-quality food and wine worth $20.3 billion annually. This aligns with Adelaide's strong property market performance and the recent strengthening of the state's economic strength. Additionally, on March 12, 2024, China announced the cancellation of tariffs on wine between China and Australia, which may further drive the development of South Australia's economy.
Currently, Adelaide's vacancy rate is at a record low of 0.5%. There is no denying that Adelaide offers many investment opportunities. Areas worth focusing on include Playford, with growth of 18.4%, Salisbury with growth of 17.5%, Gawler with growth of 15.5%, Campbelltown with growth of 15.5%, and Walkerville with growth of 15.1%.
Canberra Property Investment Strategy
Canberra Market Characteristics
As of April 1st, the median price in Canberra is $838,000, with an annual growth rate of 1.9%. Despite experiencing a 31.2% increase during the pandemic, Canberra's property values have since declined and are currently 6.1% lower than the peak in May 2022.
As the capital of Australia, Canberra has unique characteristics in the property market. Its median property price is the second-highest in the country, second only to Sydney, and shows a stable upward trend. Over the past five years, Canberra's property market has maintained a balance between supply and demand, seemingly without the drastic fluctuations seen in other capital cities, but it continues to offer moderate growth for investors. Truly living up to its status as the nation's capital, even its property prices exude a sense of "reassuring stability."
Canberra Investment Opportunities
Being the capital, Canberra's job market is dominated by public service and government employees. Data from profile.id shows that nearly 12.5% of Canberra's population is engaged in public service, and the high cost of housing in Canberra is supported by this job market.
Economist Ligdopoulos mentioned that Canberra is experiencing a shortage of new medium-density housing, including new homes and developments, which may support the city's future growth. However, due to a lack of new housing in the market, older properties in Canberra will face fierce competition.
Canberra's apartments have shown remarkable performance. Areas to focus on include Woden Valley, which saw a growth of 12.7%, and the Inner South area, where apartments achieved a 12% annual growth. Investors should pay attention to these areas.
Overall, with a strong public service sector as its backbone, Canberra will remain a stable and reliable growth area for a long time.
Darwin (Northern Territory) Property Investment Strategy
Darwin Market Characteristics
As of April 1st, the median price in Darwin is $498,000, with an annual growth rate of 0.5%. Darwin remains the most affordable city to buy property, with a median price of $573,000 for houses and $367,000 for apartments.
The city is known for its relaxed lifestyle and low population density, which has become an additional advantage in the post-pandemic era. Many investors have shown interest in Darwin's real estate market since the pandemic. While the Darwin property market is relatively stable, the average rental performance is good, reaching $583 per week. The low property prices have increased the average total rental yield to 6.5%, the highest among all cities.
Darwin Investment Opportunities
As the most affordable capital city to purchase an apartment, Darwin's affordability will attract more buyers. In 2022-23, the employment rate in the Northern Territory (where Darwin is located) increased by 4.1%. The government expects a further 2.2% increase in the employment rate in 2023-24, along with a 2.8% increase in wage prices. It seems that the Northern Territory government's plans for job opportunities are taking effect.
The efforts of the Northern Territory government may push the property market higher in the long term, with property prices likely to gain momentum in mid-2024 or next year.
Several northern suburbs of Darwin are potential hotspots for property investment in 2024. These include Alawa, which saw a 19.1% increase, Jingili with a high rental yield of 6.2%, and Leanyer, where rents increased by 10%.
Hobart (Tasmania) Property Investment Strategy
Hobart Market Characteristics
As of April 1st, Hobart's total return rate is 7%, with a median house price of $649,000. It currently ranks towards the lower end in terms of return rates among the eight capital cities in Australia, with an annual growth rate of only 0.5%. According to official statistics from the ABS for the period 2016-2021, the price trend for Hobart has been somewhat volatile, indicating that investors can still find opportunities to enter the market at a lower point. Therefore, this city has always been a favorite for speculative real estate investors.
Hobart's performance was largely lacklustre in 2023, with Tasmania's clearance rate of 29.6% ranking last when the average clearance rate for all capital cities in Australia was 64.9%, indicating a relatively weak auction market.
The reasons for the relatively sluggish market can be traced back to rising interest rates leading to a significant decrease in borrowing capacity, as well as a sharp slowdown in population growth in Tasmania. Hobart no longer has the affordability advantage it once had, and low-priced suburbs lack future projects.
Hobart Investment Opportunities
However, opportunities still exist. Hobart's fundamentals are solid, with unique economic and natural resources. After easing inflation, Hobart's property market is expected to regain its previous vitality. For those looking to invest or own property in Hobart, there are still some excellent, affordable, and livable suburbs to choose from. For houses, consider Warrane, Berriedale, and Glenorchy in Hobart; for apartments, consider Bellerive, New Town, and Glenorchy areas.
With Tasmanian Premier Jeremy Rockliff recently re-elected, he has promised that young Tasmanians will not have to pay any stamp duty when purchasing a home for under $750,000. Over the past six years, the Tasmanian government has used a unique policy of a 50% stamp duty discount to help many Australians buy their first homes, and the Tasmanian government has spent a lot of money to promote the property market and economy.
Conclusion
For those who have read this far, you may have noticed that there is no city that can be called the "warrior of hexagons," and each city has its own strengths and weaknesses. The ratings above are based on nearly a hundred reports and data analyzed by me and my data team, summarising the real estate data objectively for everyone. If your preferred investment area differs from the analysis in this video, that's perfectly normal.
I can responsibly tell you that every city, every neighborhood, and even every street has its own property cycle. Therefore, even top economists cannot definitively say which city is the perfect investment city. This also means that cities ranked lower may also hide top-notch investment opportunities.
Choosing an ideal target is not easy. The most important thing in real estate investment is to accumulate experience, observe patiently, and analyze with data. The "perfect score" Australian property may be closer than you think along your investment journey.
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Alison’s Story
Born in Hong Kong an moved to Australia, I have been associated with real estate all my life. As the plane slowly landed on the runway of Melbourne Airport, my life and career also changed to another runway. I changed from a Hong Kong real estate agent to an Australian real estate agent, and successfully obtained the Australian lawyer qualification.
When I was working in a law firm, I was surrounded by highly educated professionals. Even though their wages are very well, and they are absolutely the elites in society, but their lives are full of hard labor, and it’s hard for them to get rich through buying properties.
So I spend all my time and effort on learning financial and real estate investment knowledge, hoping to achieve financial freedom as soon as possible, and let my parents who have worked hard for many years live a good life.
Now I will share with you the knowledge and experience of investing in Australian real estate, and embark on the road to financial freedom together.
Alison Australian real estate information platform
The original intention of Miss Alison to establish investwithalison.com is to provide neutral Australian real estate information through this platform and help investors establish the most suitable investment strategy.
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