Investor Focus Moves To Smaller Cities

Posted on 18/04/2018  
Investor Focus Moves To Smaller Cities

Smaller capital cities and regional centres are now the primary focus of property investors, as attention switches from Sydney and Melbourne.

The latest edition of National Top 10 Best Buys published by illustrates the movement in capital growth prospects, with new markets rising as the two biggest cities wind down following their recent up-cycles.

Hotspotting founder Terry Ryder, says the reality that Australia has many markets moving in different directions and at various speeds, is an advantage for property investors.

“While many commentators tend to discuss Australian real estate as a single market, there are many different markets driven by events in their local economies,” he says. “Sydney and Melbourne have been rising, while Perth and Darwin have been falling, and others cities like Brisbane and Adelaide have been marking time, with only very minor growth.”

Ryder says that while only the outer-ring areas of Sydney and Melbourne are still firing, Hobart is performing strongly, Canberra is rising steadily and Perth is recovering.

“We also expect better performance from Adelaide and Brisbane in the next 12-18 months,” he says.

In regional Australia, cities such as Newcastle, Geelong and the Sunshine Coast have strong local markets, while other regional centres like Ballarat and Townsville are starting notable growth phases.

“National factors like access to finance and the level of interest rates are common across the country, but the core factors that differentiate one market from another, are events in the local economy.

“These include population growth, business expansion and spending on infrastructure, which generate economic activity and jobs creation. Out of that comes local demand for real estate.”

Ryder says Perth is an example of the emerging opportunities nationwide as market scenarios change.

Perth is emerging from a period of decline, with growing evidence that a recovery phase is under way. Sales activity is rising, vacancy rates are falling and values are growing in the million-dollar suburbs.

“I see Perth as the city of opportunity for investors,” he says. “Prices are down after a couple of downturn years and there is an absence of competition from other buyers ahead of the upturn.” 

Ryder also tips Adelaide to show stronger price growth, as investors discover the value-for-money available in one of our cheapest capital cities, underpinned by significant events evolving in the local economy.

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