A state-by-state guide to property investment in Australia: NSW, Vic, Qld (Part 1)

As one of the main centres of business and livelihood in the country, Sydney features a buzzing round-the-clock city life, accentuated by entertainment hubs, recreational centres, community facilities and expansive public transport systems. Outside the city centre, the state boasts a diverse set of lifestyle options for residents and visitors—from the stunning beach towns of Bondi, Coogee and Manly to the laidback regional suburbs of Hunter Valley and the Blue Mountains.

Truly, having the best of both worlds has made NSW one of the most sought-after locations in Australia, particularly for professionals and office workers.

As of October 2018, median house prices in Sydney were at $1,101,532 while unit prices were at $734,775.

While the said prices are still considerably high, with Sydney having just come off an unprecedented property boom, housing affordability in Sydney has improved better than other major capital cities, according to the HIA Affordability Index.

“While it remains the least affordable market in the country – by quite a margin – the index is 9.0 per cent higher than a year earlier which is a significant positive step. The improvement in affordability has primarily been driven by the declining trend in home prices over the last year,” HIA economist Geordan Murray said.

The downturn in the Sydney property market has made entry a greater possibility, particularly to first-home buyers.

Despite the high levels of advertised stocks, strong economic growth, jobs creation and migration ensure the continuous growth of population and, therefore, a consistently high level of demand for housing. In fact, while at its softening phase, the rental market in Sydney continues to tighten.

For investors who are keen to snag a bargain, experts recommend opting for a studio or a one-bedroom apartment, which are usually priced around $750,000. Property markets outside Sydney offer units for as low as $280,000 (Hunter Valley) and $254,000 (Orange).

The eastern suburbs, lower North Shore and inner west regions of NSW are also deemed as good ‘buyer’s markets’ for those who are planning to purchase established apartments, with prospects of growth by late-2019.

Top performing suburbs in New South Wales ^{*based on annual median growth}

Victoria 

Population: 6,430,000 (March 2018)
Median price (Melbourne): $852,980 for houses; $496,260 for units (September 2018)

Victoria is the most densely populated state in Australia and the second-most populous state, with most of the population living in the area surrounding Port Phillip Bay, including Melbourne, the state capital and Australia’s second-largest city.

Melbourne boasts a lively arts and culture scene, highlighted at the Melbourne Arts Precinct in Southbank, the site of numerous museums and performing arts complexes such as the Arts Centre Melbourne and the National Gallery of Victoria. Across the city lie 19th-century buildings and tree-lined boulevards, as well as modern urban centres such as the Federation Square development, which offers a wide variety of recreational options.

Meanwhile, Victoria’s countryside offers locals and tourists a spectacular view of the ocean through the Great Ocean Road, a 6-hour oceanfront drive which stands as one of Australia’s biggest attractions.

The diverse lifestyle options available in Victoria has long attracted tourists and new residents from around the world, ensuring a strong demand for dwellings across the state. Most residents are students and professionals who take advantage of the proximity to universities and businesses.

While the end of the property boom has left the state’s real estate quite expensive and, thus, locked some people out of the market, both Melbourne and Sydney are now showing signs of improvement in affordability, according to the Housing Industry Association.

In September quarter, Melbourne’s house prices fell by 3.9 per cent to $852,980 while unit prices fell by 1.6 per cent to $496,260.

Real Estate Institute (REIA)’s Malcolm Gunning said: “It's a cash flow game. Don't look at your prices every single day to see whether it's going up or down. Wait 10 years and then review your prices. You'll probably see it in a very different position.”

“In markets like this, the seller loses a bit of momentum, but the purchaser has all the momentum. Stay your course, know your numbers, and making sure that your cash flow position is fine. Don't get carried away. Property is still the biggest asset cloud in Australia,” Mr Gunning highlighted.

At the end of the day, these negative conditions are all part of a normal property market cycle. For smart investors, it’s all business as usual.

Top performing suburbs in Victoria ^{*based on annual median growth}

Queensland 

Population: 5,000,000 (March 2018)
Median price (Brisbane): $567,376 for houses; $376,972 for units (September 2018)

Known as the Sunshine State, Queensland stands as the second-largest and third-most populous state in Australia, home to 10 of the country’s 30 largest cities.

As the third-largest economy of the nation, the state benefits from tourism as its major industry, generating $4.0 billion annually and accounting for approximately 4.5 per cent of Queensland’s gross state product. Among the main tourist destinations across the state are Brisbane, Cairns, Port Douglas, Daintree Rainforest, Gold Coast, Great Barrier Reef, Sunshine Coast, Hamilton Island and the Whitsunday Islands.

Its state capital Brisbane boasts a more laid-back lifestyle compared to other capital cities, set on the Brisbane River, enjoying a sub-tropical weather. While more people still prefer to live in the suburbs surrounding the city, Brisbane attracts the younger, multicultural population.

In contrast with other capital cities, Brisbane also remains in the positive growth territory as its neighbouring states feel the ‘ripple effects’ of the end of the property boom in Sydney and Melbourne. In fact, property experts believe that the Queensland capital is slowly rising as one of today’s best-performing capital city markets on the mainland with a great potential for future growth.

Since October 2017, house prices grew by 2.2 per cent to $567,376, while unit prices fell by 6.8 per cent to $376,972.

Over the past decade, Brisbane has seen a median price growth of almost 40 per cent despite flood events and the end of the mining boom.

According to Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos: “The affordability of Brisbane compared to Sydney and Melbourne has really come into sharp focus in the past year.”

“Not only are investors considering the Sunshine State capital as an investment location, but a growing number are also choosing to migrate to take advantage of the significant value gap as well as Queensland’s enviable lifestyle and strengthening economy.”

Moving forward, the growth in Brisbane will be supported by jobs growth and interstate migration, which will ultimately strengthen the demand for dwelling across the state.

Top performing suburbs in Queensland ^{*based on annual median growth}

Watch out for the second instalment of A state-by-state guide to property investment in Australia to know more about the states of Western Australia, South Australia and Tasmania.

The information has been sourced from realestate.com.au, Canstar, CoreLogic and the Smart Property Investment website.