The investor’s guide to the east coast this November

Despite property markets experiencing an undeniable rebound since the beginning of 2023, PIPA found that investor activity is on the decline. Since May 2022, new investor loan commitments have dropped over 27 per cent, and numerous property owners have sold out.

“It’s clear that the normal flow of investment activity – both inbound and outbound – has been off-kilter for some time,” stated PIPA chair Nicola McDougall.

Towering interest rates, low supply, strong immigration and low vacancy rates are all factors that Ms McDougall cited as contributors to this trend. With hardship, however, comes opportunity.

The PIPA chair observed that property prices in most areas have grown steadily over the last two quarters, and shared that “a number of reliable forecasters are predicting even stronger market conditions next year”.

So, for property watchers wanting to capitalise on this momentum by investing in Sydney, Melbourne or Brisbane, what should they keep in mind?

PIPA data suggests that knowing the unique pros and cons of each market is the first step.

Sydney

• Good for: Reliable demand
• Bad for: Affordability
• Where to look: Public transit corridors in northwest and southwest Sydney

According to senior economist Dr Kevin Hoang: “The New South Wales housing market is the largest component of the Australian housing market, with the total housing value of $4 trillion or 40 per cent of total national housing value.”

He noted that Sydney in particular “is characterised by large short-term volatility and is known for being the most expensive city to purchase and rent in Australia and in the world”.

With a current median dwelling price of $1,167,000, NSW is 30 per cent more expensive than Victoria, and 50 per cent pricier than Queensland. Sydney’s “high property prices relative to income levels have made it difficult for many first-time home buyers to enter the market”.

For buyers who already have a few properties under their belt, however, Sydney still offers investment opportunities. As the gateway to Australia, Sydney continues to welcome a steady stream of newcomers from overseas, leading to consistent housing demand.

Public transport corridors in western Sydney, including along the new metro lines, are forecast to lead the way in terms of growth.

Melbourne

• Good for: Infrastructure growth
• Bad for: Detached homes
• Where to look: City of Melbourne, City of Hume

Having recently overtaken Sydney as Australia’s biggest city, Melbourne is a strong market for property investors.

Terry Ryder, director at Hotspotting, found that the City of Melbourne offered particularly good prospects. The area’s “strong economy, with major businesses, universities, hospitals and government services, has been further bolstered by ongoing infrastructure projects such as the North East Rail Link and the propose Suburban Rail Loop,” he stated.

“These developments are expected to bring in significant investments and create thousands of jobs, ensuring continued growth and stability in Melbourne’s property market.”

Meanwhile, outer Melbourne areas like Craigieburn are good places for developers hoping to scoop up a bargain.

Mr Ryder warned that detached homes may not be the way to go in Melbourne, explaining: “The rising interest rates and shifting lifestyle demands have caused investors and home owners to look at options such as units and townhouses instead of standalone houses.”

With ancillary dwellings only permitted to be leased to family members, Victorian investors may also want to give granny flats a miss.

Brisbane

• Good for: Capital value growth
• Bad for: Renting
• Where to look: Logan City, City of Ipswich

The dark horse of Australia’s east coast states, Queensland has seen an unexpected spike in property prices this year.

“In an intriguing twist, property prices have soared by an impressive 9.1 per cent since January, all while grappling with the backdrop of rising inflation and interest rates,” noted Inspire Realty’s Colin Lee.

Nowhere has this surge been more marked than in Brisbane. Mr Lee revealed that in the September quarter alone, Brisbane property prices rose 3.9 per cent.

“The housing market in Brisbane shines, outpacing the unit market, and nearly half of this year’s growth transpired in the last three months,” stated Mr Lee.

With October showing the city “on the verge of breaking records”, Mr Lee predicts steady growth in Queensland’s capital over the coming months.

When it comes to rental affordability, however, the Brisbane market is less sunny. Plummeting supply levels and soaring prices are “steering people away from renting and towards the pursuit of property ownership,” said Mr Lee.