The results of a new survey show where property investors believe are the best capital cities to invest into – and they’re not Sydney or Melbourne.
A survey by property investment consultancy Momentum Wealth based inhas shown that Perth and Brisbane are the most preferred capital cities to invest into, with 36 per cent and 33 per cent.
According to Emma Everett, team leader of Momentum Wealth’s buyer’s agents, not only were these capital cities’ affordability a key factor, investors find Perth and Brisbane a lucrative investment opportunity due to the potential long-term benefits.
“Whilst both markets offer strong levels of affordability compared to Sydney and Melbourne, they also hold promising opportunities for long-term growth, with Brisbane already experiencing overall price growth and areas of Perth performing strongly as the market enters its recovery,” she said.
For investors looking to enter these markets, Ms Everett recommended that, as with any property, they conduct their due diligence into the property and the area.
“In these early stages of recovery, it’s not uncommon for different areas of the market to experience price growth at different times, so investors will need to remain diligent in their research to ensure they are selecting an area that aligns with both their investment strategy and growth expectations.”
Perth, labelled the best capital city to buy into from the survey results, also saw a boost in confidence, with 70 per cent of WA investors seeing Perth as the most appealing capital city for investment.
As a result of the increasing confidence, MS Everett said price growth is notable in some locations.
“Perth is offering some great buying opportunities for investors looking to take advantage of current levels of affordability, but those looking towards high-demand suburbs will need to move quickly or risk entering the market when competition levels have already picked up,” she said.
“We are already seeing significant evidence of this in some areas of the market, with increased activity from trade-up buyers resulting in significant price growth in Perth’s central sub-region across the past 18 months,” she said.
Also to come out of the report was that 67 per cent of respondents reviewed their loans over the last year to November 2018, a rise of 8 per cent from the previous year’s results.
Caylum Merrick, team leader of Momentum Wealth’s mortgage broking team, said the current tightening of finance made loan reviews more of a priority than ever.
“In today’s lending environment, and in any lending environment for that matter, it’s vital that investors conduct regular loan reviews to ensure they are still receiving the best rates and products to support their investment goals,” Mr Merrick said.
“Whilst we’ve seen record low interest rates in recent years, we’ve also seen a number of buyers impacted by changing lending restrictions. With many banks now raising their interest rates outside the RBA cycle, it’s more important than ever that investors keep their finger on the pulse,” he said.
Labor’s potential change to negative gearing is also set to affect the majority of investors, with 61 per cent of respondents saying they have negative cash flow.
However, Ms Everett said that property investors should be focusing on investment fundamentals, rather than gearing .
“Whilst negative gearing provides a useful tax benefit for those with a negative cash flow portfolio, investors need to remember that tax offsets only form a small portion of a property’s overall returns, and that factors such as land value, location and tenant appeal remain critical to a property’s performance,” she said
“Investors who get these fundamentals right from the start will be better placed to weather potential changes and short-term volatilities in the market.”