The Australian property market is such an attractive opportunity that people around the world are spending money on Aussie real estate. In 2016, Chinese investors spent $24 billion on Australian properties, and Chinese spending on Australian property has reached nearly $500 million per week.
But what about Australians themselves? Where are Australians spending money on investment properties?
Before we talk about specific areas, let’s discuss the market conditions affecting Australian property investments right now.
Several market conditions are affecting the way investors currently approach real estate in Australia. First of all, lenders have recently tightened their policies, and this has limited the number of investors who qualify for larger mortgages.
For example, CoreLogic found in a study that 74% of Gen Xers have a desire to invest in property, but 21% said it’s difficult to secure lending. Investors are finding that mortgage terms are much different for investment properties than they are for owner occupiers. Interest rates are higher, and the regulatory burden can be steep.
All of these concerns add up to a changed landscape for property investors. But the changes are not all negative; in fact, for savvy investors, these current market conditions set the stage for opportunity and growth. You simply have to look for the places where opportunity is greatest. Let’s see where Australians are spending.
Where Australians are Spending in Melbourne
In the last few years, Melbourne has seen the highest residential property price increases in the country. As of the end of March quarter 2017, a typical home in the suburb of Thomastown cost $570,000. Just last year, it would have cost about $440,000.
Property Hotspots in Sydney
Investors have also been paying a lot of attention to Sydney, which has experienced a five-year bull run. In the last couple of months, however, prices have begun to cool off. The NSW government increased taxes for foreign buyers, giving Australian investors a break.
Sydney’s housing market hit an annual growth rate of more than 18 per cent back in February, but the rate of growth has slowed since then. If you’ve been biding your time waiting for the right moment to invest in Sydney real estate, you’ll be happy to hear that prices are finally leveling off or at least softening.
Property Market in Brisbane
Through 2018, Brisbane house prices are expected to rise almost 2%, yet the inner city apartment market is set to slow. For the March quarter 2017, the median house price in Brisbane was $532,504, and this is forecast to rise considerably in several areas beyond the inner city.
Property Market in Canberra
Finally, Canberra is still a hotbed of investor and homeowner interest. In 2016, house prices jumped 5 per cent up to a median price of $684,395. With a high demand for houses and improvement in the local economy, Canberra is experiencing a very tight rental market, which is always good for property investors.
The remaining four capital cities (Hobart, Adelaide, Perth, and Darwin) have experienced relatively flat price changes in the last year.
Knowing where Australians are spending can help you with your personal investing strategy. If you want to capitalise on the current hot markets, look for properties in the Sydney, Melbourne, Canberra, and Brisbane areas.
To discuss your personal property investment strategy, reach out to us at Full Financial Services. We’re here to help.