- Firsthand research is always better than heresay.
- Demand for quality locations will always be there.
- Look for growth drivers like infrastructure development.
The huge property price growth seen over the past two years may have softened in some areas, but investors be warned: if you are waiting for values to fall substantially before you buy, there’s still plenty of growth to happen in 2023, writes By Kate Hill, Property Buyer, Adviseable.
Opportunities will come from buying in markets with growth credentials at a time of record low vacancies and rising rental yields – while other opportunities will come from buying in markets which are less competitive than before, but with growth in their future.
Don’t follow the herd
Following the herd can seem easier, but it’s not necessarily the right thing. Many investors are too influenced by media commentary about what is happening in the market, rather than making informed decisions from firsthand research.
Many got it wrong in early 2020 when they forecast a collapse of the Australian property market – it ended up growing by 25 per cent.
Keep this in mind. Don’t just assume what you’re reading or hearing is fact or that it’s credible because it’s been published by a major media outlet.
Demand for quality locations will always be there for the long-term, so it is important not to get put off by reporting on short-term trends and fluctuations.
It can be unsettling at the time. The hardest thing to do is to forge your own path and be the trailblazer when all of your reading tells you to do the opposite.
But it is also what sets the successful investor apart from the crowd. You have to look past all of that media white noise, and buy in strategic locations.
Why now is the time to buy
I genuinely believe that the window of opportunity to get into the market at a good price is now.
A lot of markets in which they are helping clients to buy are very active and are not slowing down.
Investors are achieving good yields and its unlikely prices are going to drop substantially in those good locations.
What are the growth drivers?
The continuing shortage of properties is what will continue to drive property price growth for the next couple of years.
This has been exacerbated in part by government policies and banking and lending policies which deter investors.
This included the land tax debacle in Queensland, where the state government tried to charge land tax taking into account investment properties owners had in other states, which they have scrapped.
Many investors left the market during the pandemic as prices increased so much – they took the opportunity to sell at a significant profit to owner occupiers, which also further reduced the rental pool of properties.
Listings are still much lower than this time last year for sale and for rent – and with the international migration numbers expected to increase substantially in the next year, the pressure on the housing market will increase even further.
All of that equals a shortage of rentals and a shortage of homes generally, which will lead to increased property prices and rents.
Locations to consider
Many of the locations that are the focus for clients are those they have been operating in for some time, as property is a long-term game.
Adelaide is still crazy. There are a lot of cash buyers and investors are missing out to cash buyers, often owner-occupiers making unconditional offers.
Despite this, Adelaide is still a very affordable market which makes it more appealing as interest rate rises mean investor borrowing capacity may have reduced.
Other locations they are buying in include Bendigo, where the vacancy rate dropped from 0.9 per cent in 2020 to 0.5 per cent now and the median value grew from $360,000 to $535,000 in that period.
The Sunshine Coast is a similar story, with its vacancy rate down from 2.8 per cent to one per cent over the same period and its median up from $555,000 to $795,000.
I would choose the Sunshine Coast every day of the week over the Gold Coast because, from an investment perspective, the Gold Coast is the one that gets spooked all the time.
The Gold Coast is very appealing, but it doesn’t have anywhere near the same basic growth fundamentals that the Sunshine Coast does.
I also like the Olympic precinct in Brisbane where a lot of infrastructure will be built as well as greater Brisbane LGAs such as Ipswich, Moreton Bay and Logan which will also benefit.
Also appealing from an investor perspective is Western Sydney, around Badgerys Creek, including Blacktown, Liverpool, even down to Campbelltown.
Follow the infrastructure
The big growth driver in areas like Western Sydney and other good investment locations is the infrastructure being delivered.
The airport is a big growth driver which will make the region an economic powerhouse.
They are spending billions out there, the region surrounding the airport called the Aerotropolis, it’s being developed into a major employment hub that includes rail lines, the science park and the Henry Health Precinct. There is so much happening.
Be on the lookout for locations with “meaningful” infrastructure projects like this, as they will create ongoing employment and demand for housing.
