As Sydney and Melbourne continue to soften after an unprecedented property boom, experts encourage investors to explore opportunities outside the major markets. Is Western Australia ready to become the next hotspot?
Over the past year, Suburbanite’s Anna Porter refused to believe that the Australian property market is under a doom-and-gloom spell.
While it’s true that Sydney and Melbourne, two of the biggest markets in the country, are coming off from the peak and are expected to flatten out soon, data shows that investors enjoyed significant returns on their investments in the past 12 months.
“We've been buying a lot in Melbourne and Geelong and clients have been making the likes of $50,000 to $60,000, even $100,000, in 12 to 24 months of purchasing the property. That's not very doom and gloom to me.”
“Parts of Sydney were still growing up until recently. There’s definitely growth down around Adelaide, as well as Canberra. Canberra's been going incredibly well. Hosts from Sydney say, ‘Oh, the market's crashing’, but I say, ‘You spend five minutes in Canberra, put 35 people at an open home and all of them will be bidding on top of each other.’
“It's cyclical—every market moves at different times. It’s definitely not doom and gloom if you step outside of Sydney and Melbourne,” the property expert said.
Ultimately, the changing property market will favour investors who are able to find long-term opportunities to build wealth, grow equity and generate cash flow.
In recent times, Western Australia has been gaining attention for being primed as one of the next property hotspots in Australia now that Sydney and Melbourne are taking their time off the spotlight.
The state and its capital Perth are on experts’ watch list particularly because of the affordability of housing and the significant improvement in several investment fundamentals, including the increase in population and jobs growth.
According to Ms Porter: “We've seen that retraction in values is stabilised now and we're not seeing much negative growth coming out of the inner suburban metro areas. Obviously, regional WA's a little bit different, but the metro areas, that's stabilised now for six to 12 months, which is a great sign.”
“There's certainly a little bit more positivity around that job sector and more diversity, too, which is fantastic and the population migration is starting to increase, which is also good. It's certainly starting to show all the right signs.”
However, one thing has been stopping property experts from having full confidence in Western Australia.
“The only thing we're waiting for is a decrease in vacancy rates because there is a direct correlation between what happens in the growth of properties and how the vacancy rates perform. If you've got a high vacancy rate, that can often signal an issue with supply and demand.”
By the end of 2019, Ms Porter expects the state to present some of the best investment opportunities across Australia.
Unlike Western Australia, some areas across the country are better left alone by property investors at the moment.
“My phone has been sitting here buzzing and I reckon three of those text messages will be agents saying, ‘Do you want to buy this?’ When the market's calling, my answer is ‘No, thank you very much,’” Ms Porter said.
“Same with Sydney, there's a lag in the sales. Darwin, definitely, is a market that's still retracting and still struggling. They're probably the ones we want to avoid the most.”