The strongest performing cities last financial year revealed
The perfect storm of stagnant house prices and sluggish rental conditions has hit the investment market hard. However, there are a few performers outside of Sydney and Melbourne revealed in this state-by-state breakdown.
Research released by CoreLogic has revealed that despite the remainder of the country struggling to pick up steam, Canberra and Hobart have outperformed their larger counterparts in terms of total investment returns in the 2018-19 financial year.
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Cameron Kusher of CoreLogic explained the importance of looking beyond the myopic view of markets dominated by Sydney and Melbourne.
“As always, there will be diversity with most regions of the country outside of Sydney and Melbourne yet to show signs of an improving housing market. We may see an improvement in returns in the two largest capital city housing markets while returns continue to weaken elsewhere,” Mr Kusher said.
The nation’s capital saw total returns of 6 per cent over the 2018-19 financial year – it isn’t all good news though; this is still the lowest rate of return since 2013-14.
Hobart joined Canberra, maintaining a net positive total return over the 2018-19 financial year; however, it was still a significant shortfall based on previous years, with an 8.1 per cent return, compared to 17.4 per cent in the 2014-15 financial year.
Looking around the country, investment yields continue to be sticky, with total returns from residential property recording a -3.3 per cent fall over the 2018-19 financial year.
Putting that into context, it was the only year since 2005-06 that the total residential property returns were negative – in a telling sign, these results were worse than during the global financial crisis and the ensuing 2010-12 housing downturn.
NSW
Across NSW, total returns fell over the 2018-19 financial year in both Sydney and regional NSW. In the metropolitan area, it was the second consecutive financial year returns have fallen; however, it was a larger fall of -6.7 per cent.
VIC
CoreLogic’s data revealed similar falls in Melbourne, with a -6 per cent decline, while regional Victoria has seen a 4.5 per cent – the 2018-19 year saw the first negative returns since 2011-12 and the largest fall in total returns on record.
QLD
Looking further North, both Brisbane and regional Queensland remained positive but endured a substantial reduction in returns. Despite retaining a positive status, Brisbane’s returns remained modest at 1.7 per cent, the lowest since 2011-12.
WA and NT
Perth and regional WA recorded their largest annual falls in returns on record – over the 2018-19 financial year, Perth recorded a -5.3 per cent decline, while regional WA experienced a -5.0 per cent decline.
The Northern Territory echoed the broader national sentiment, with Darwin recording a decline in return of -3 per cent over the 2018-19 financial year – regional NT, however, bucked the trend, remaining relatively positive, with a 7.8 per cent rate of return for the 2018-19 financial year.
Mr Kusher was, however, optimistic, saying, “With early signs that the rate of decline in housing values has slowed in Sydney and Melbourne and rental yields rising across most regions of the country, the outlook for total returns over the coming year looks a little stronger at a national level.”
