The pandemic-induced residential property boom is slowing down. Interest rates are on the rise. And it’s a difficult time to predict where and how housing prices will move in the months ahead.
So, what does all this mean for property investing in 2022? As investors should we tuck our dollars back into our savings accounts and wait for a better day?
Well the answer is – no. If you have a strategic property plan to achieve your financial goals, then any time is the right time to invest.
But once you decide that investing is right for you and your financial strategy, the next, very important step, is to decide where.
Let’s explore the best cities for property investors.
The Best Cities For Property Investors
The answer to this question is both totally unique to you and universal. After all, what makes an excellent investment property for you, could be different from your neighbour or friends or person on the street. Factors such as your budget, age, timeframe and investment objectives are directly relevant. But of course, there are objective considerations to factor in as well.
So before you start to look at potential locations, consider first the things that are unique to you:
First, what are your goals and needs?
Second, what are potential renters and occupiers looking for?
And third, what does the market say?
What Are Your Goals and Needs?
First consider your goals from property investing. Are you looking for cash flow from the property? Capital growth? Or just a second home or somewhere to house family members while earning rental income?
The answer to these questions will give you some information about the best cities for you to purchase an investment property. After all, it doesn’t make much sense for you to buy a home in the Gold Coast for your mother-in-law to occupy, if your family lives in Sydney.
Talking to a financial advisor or investment loan specialist about the right move for you is also a great idea. This will help you to be fully informed and ready to go.
What Are Potential Renters Looking For?
According to SQM Research, national residential property rental vacancies fell to 1% in May, a 16-year low. In the smaller capitals of Brisbane, Perth, Adelaide, Canberra and Darwin, the vacancy is less than 1%.
For all of these potential renters, there has been an increased emphasis on liveability and lifestyle. Particularly after lockdowns triggered an assessment of work/life balance for so many.
So the next step, when you’re considering where to purchase an investment property, understand whether it will appeal to your potential renters. To understand that you’ll have to take into account:
Security – is the property private, secure and safe for potential occupiers?
Lifestyle – what does the area offer in terms of good schools, shops, healthcare, outdoor recreation, and other amenities?
Transport – what are the commute and local roads like and is there access to reliable public transport?
Jobs – are there solid employment opportunities, or reliable high-speed internet for those able to work from home?
What Does the Market Say?
Now you’ve considered your own situation and what your potential tenants and occupiers are looking for. You should be in a better position to understand what you’re looking for in a city for investment purposes. Now it’s time to look at what the market says.
Canstar’s Rising Stars: Australia Property Market Report 2022 is a great place to start. It ranks 14 jurisdictions nationally – eight capital cities and six regional areas. It also lists 110 ‘Rising Star’ suburbs across Australia as the best cities for property investors for future growth potential.
Demographics of any location play a big role in it being an investment ‘hot spot’, so research is always important. Look for areas that have a proven history of strong capital growth – with many owner-occupiers – and where wages (and disposable income) continue to increase above average.
Cities to Watch in 2022
While the market is currently in flux, there are still a great many opportunities for property investing. Here are a few cities and regions to keep your eye on. And if the area you’re interested in isn’t mentioned, get in touch with us to talk through your property investing plans.
Queensland – Brisbane, Sunshine Coast and Gold Coast
By late 2021, Brisbane was recording a rapid rate of house price growth, due mostly to interstate pandemic migration, increased infrastructure spending and its success in navigating through the pandemic. The 2032 Olympics announcement has also seen increased investment interest across Brisbane, particularly the suburbs of Woolloongabba, Annerley and East Brisbane.
Despite the recent downturns Brisbane will likely remain one of the best performing property markets in Australia over the next few years. In fact, Westpac Bank recently updated its property forecasts, with Brisbane prices tipped to surge 20% between 2022 and 2023.
The lifestyle coasts to the north and south of Brisbane have also seen strong investment growth. They’re within an hour or two of Brisbane and are ideal for those seeking a sea-change while working from home or commuting.
Queensland – Toowoomba
Regionally, the Darling Downs city of Toowoomba has seen strong investment growth, thanks to increased spending on transport infrastructure. It’s only an hour from Brisbane, so is a great affordable lifestyle option while being close to capital city amenities.
New South Wales – Sydney
Residential areas close to the CBD will hold their value, particularly where the local amenities and lifestyle opportunities are high.
Suburbs such as Coogee, Kensington and Maroubra to the east and Neutral Bay on the northern side of the harbour are ones to watch.
Regional New South Wales
Regional areas such as Tamworth, the Hunter Valley, Wagga Wagga, Dubbo, Port Macquarie and Orange offer vibrant, growing economies and an affordable lifestyle. Many people who left regional areas earlier in their lives, are making the move back for the promise of a better life for themselves and their families.
The $15 billion investment in the Inland Rail link connecting Brisbane and Melbourne also means that regional areas along the route may see a surge in property value when the freight line is operational.
Victoria – Brimbank
Brimbank – which includes St Albans, Deer Park and the Sunshine suburbs – is enjoying an investment growth at the moment. It offers the promise of growth that infrastructure projects and urban renewal trends are driving. Houses are still relatively affordable as well.
South Australia – Adelaide & Onkaparinga
The South Australian economy has recovered well from the pandemic. Adelaide has historically shown a steady growth rate, across housing and units. While it’s never been a heavy hitter, with lifestyle choices being front and centre, Adelaide may finally have it’s time to shine, especially for savvy investors. In fact, CoreLogic figures published in December 2021 showed that Adelaide had the second fastest house price growth in the November quarter.
Onkaparinga is one to watch – an Adelaide seaside suburb that offers lifestyle and affordability all within striking distance of the capital city.
Talk to an expert
Investing in property is an experience unique to you and your circumstances, and the ‘perfect location’ varies from person to person. It doesn’t matter where you are on your property investment journey. Whether you’re a first time investor or savvy investor adding to your property portfolio, we can help you identify the best cities for property investors and support you every step of the way.
