Are Queensland and New South Wales good areas for property investment?

Right now, all the data are showing that the Sydney property market is set to go through a period of minimal to no growth.

“At this stage, I don't believe [Sydney is the right place to be]. So, [just] dust the tiles off [in your existing properties], keep the ovens covered,” Steve said.

While the market can definitely recover over time, property investors will be better off making their money work somewhere else if they want to continue growing their portfolio.

Investing in Queensland

In the far-north part of Queensland, many property investors focus on Cairns and the surrounding areas. However, Steve has not been a fan of the area because its economy is mainly tourist-driven. While the yields are quite attractive, the cost to operate and maintain an investment property is also high.

The buyer’s agent said: “We're talking about council rates, management, trades, all that strata—it's very, very high.”

“It's not an area for me. It's more of a market that you need to time impeccably, otherwise, you'll lose money. The growth over long-term has been no good,” he added.

Central Queensland, which has a lot of mining areas, offers pretty much the same opportunities for property investors because of the current oversupply of properties. Property investors are also advised to stay away from the central business district of Brisbane because of the oversupply of new build units that might not be taken up for a while. Meanwhile, Gold Coast, which has been receiving a lot of media attention recently, is considered as fickle a market as Cairns.

“If you time it and you time it well, you'll make a lot of money, but it's also the area that goes from boom to bust very, very quickly,” Steve said.

As it is very sentiment-driven, Gold Coast presents a lot of risks for property investors, including high operation and maintenance costs.

According to Steve: “Never forget that developers are very good at what they do and their systems and processes are very quick, so they can build a lot of accommodation very, very quickly.”

“The Gold Coast lurches from … a point of equilibrium to oversupply very, very quickly,” he explained further.

Investing in New South Wales

The property markets in some of the areas on the north coast of New South Wales, which Steve classify as regional areas, are doing well because “the whole affordability scenario is kicking in”.

“Yields [and] cash flow is pretty good in relation to the purchase prices,” the buyer’s agent said.

Property investors who, instead of going all in, are only looking to balance their portfolio in terms of cash flow will benefit from investment properties in these regional areas. Other areas in regional New South Wales and central New South Wales are also set to be good locations for investing in real estate, especially those that have multiple streams of income.

Steve explained: “If we go back to the beginning [of] this cycle … the GFC [global financial crisis] areas such as Dubbo performed very well for us. It's given us 100 per cent growth, great [and] strong 8 per cent yield, cash flow … then everyone sort of jumped in and we went out.”

On the other hand, property investors must be careful with places like Armidale and Orange, which are often also sentiment-driven. Orange had a good run when the Arcadia Mine was built and many property investors who got in before that did well—rode the wave and got out before they start losing money as it cools down.

“There's not a lot of reasons why I want to go back there at the moment. Vacancies are pretty high, as well,” according to the buyer’s agent.

Tune in to Phil Tarrant’s portfolio update on The Smart Property Investment Show to know more about the current state of different Australian property markets and where they are headed, as well as the best suburb for your next investment property.