Where to invest in Australia’s residential market

Last year was, without doubt, a tale of two halves for Australia’s residential property sector.
 
Looking ahead, there remains some uncertainty about the fundamentals across all the residential market sectors. However, it’s clear that the markets in the main eastern seaboard cities, particularly Sydney and Melbourne, reversed their downward trend in H2 2019.

Activity and, in some areas, values are on the rise again and the big question is what will happen this year?
 
To answer this question, I asked our residential property valuers (of which there are several hundred in Australia): if they had a limitless source of funds - what type of residential property they would personally invest in, in which areas and why? These are some of the responses:

NSW
Sydney

• Older style blocks of units with strata subdivision potential in the inner-city area of Sydney, due to:
  • Positive cash flow;
  • Subdividable, with the potential to sell off units individually;
  • The established nature of the inner-city market, offering close proximity to transportation, universities and the CBD, in addition to low vacancy rates and a track record of good capital growth.
    
    

• Purchase in high end blue-chip locations such as:
  • The inner-west, CBD and eastern suburbs of Sydney, which are safer long-term investments and experience above average growth.
    
    

• The south-west corridor. Anywhere along the railway line from Revesby to Holsworthy.

ACT
Canberra

• Anything in the prestige sector, priced over $5m. Other opportunities include the inner south suburbs such as Yarralumla or Forrest and, for investment purposes, something with a decent land component, greater than 900sqm within the inner north, preferably Dickson/ Braddon and with a RZ1 zoning

QLD
Gold Coast

• Buy vacant land close to the beach. In particular, the central coastal suburbs of Main Beach, Surfers Paradise, Broadbeach and Mermaid Beach. If there is no vacant land available, buy an old house or a small block of flats close to the beach.
• The moral of the story is: the significant level of growth over the past 30 years has been for coastal properties where the significant proportion of the value of the property is in the land.
  

Brisbane

• Land banking by targeting acreage land on the outskirts of existing development areas. Look for land with basic improvements, medium term income potential and long-term development potential.
• Woolloongabba/East Brisbane/Dutton Park – The combination of large areas of urban renewal, proximity to the CBD and a major infrastructure project (the Cross River Rail) means this area will thrive and single dwellings and small lot developments will be well regarded

Sunshine Coast

• Invest in high density residential sites around Maroochydore – more specifically south of the Maroochy River and east of the Sunshine Motorway. Key factors are: proximity to the  new Maroochydore CBD, Sunshine Coast airport, transport hubs and access to world class beaches and waterways.

SA

• Highbury, Paradise, Hope Valley, targeting original dwellings on larger allotments of 700+ square metres. Either demolish and subdivide or hold with the dwelling tenanted until the timing is right to develop the land.
• Sheidow Park, Hallett Cove, Trott Park – southern suburbs located approximately 22km from the CBD. Expansion of road infrastructure will increase the appeal of these areas, which remain affordable. Target properties with scope to ‘add value’ through renovations to original dwellings.

VIC

• Construct side-by-side single storey townhouses in the inner south east.  Lower construction costs mean the same returns can be achieved as that for double storey townhouses which are nearly double the size. There is high demand from an ageing demographic for good quality, single storey townhouses.
• Target the Mornington Peninsula as this area is attracting Melbourne buyers cashing in on high city prices and seeking value buying – particularly units and townhouses.

WA

• Look for areas where there has been speculative buying pre-infrastructure projects. There is still a lot of good buying opportunities in the market.
• The Perth Hills areas for lifestyle property offers terrific value with prices that are back to levels last seen in the 2000’s with property selling at well below replacement cost.

For more information on our Valuation & Advisory Services offering visit https://www.cbre.com.au/real-estate-services/directory/valuation-advisory-services