December – Property Clock (Capital City recap)

It’s clear when reviewing the market positioning, we are seeing affordable properties stand out in comparison to cities that have a premium attached to them (on a high level, as some more premium markets are still going well when doing a deep dive)

This also shows that when analysing real estate, we must go deeper, national data points whilst helpful from a directional sense, won’t really do you much good as you don’t buy the country when you buy your next investment.

Imagine if the media started writing about each of these markets across the clock. This would give a different feel compared to what we are hearing now with much of it isolated in either mining markets or premium capital city markets.

Capital city recap

Sydney & Melbourne = Declines have still not stopped, approaching some of their largest declines in some areas for many many years. Melbourne had a recent shift from ‘starting to decline’ to ‘declining market’ in this months report. Melbourne yields also are some of the lowest nationally and do not offer investors a significant incentive to purchase in periods of uncertainty. However, greater Melbourne regions are still showing growth in pockets where there is affordability, as a catchup effect occurs in areas further out. Melbourne’s great city layout and structure as always been one that allows ‘further out’ suburbs to not ‘feel so far out’ through different infrastructure and also basic facilities/amenities in great proximity.

Brisbane = It’s not too hard to see why Brisbane has been positioned as a ‘rising market’. Affordability, great yields, infrastructure spending, net interstate migration, and very tight vacancy rates in some pockets of the city. Brisbane is still a two-speed market, where houses are performing well but unit markets still have some supply to eat up (although it has been trending well in some pockets).

Perth = There are promising signs for Perth within some of its ‘lifestyle’ markets (near beaches / water / inner city proximity / jobs etc..). This can also be seen by the split in outer and inner Perth positioning with the property clock. Whilst there is a lot of mining investment coming back, investors should still be aware of the ups & down mining economies can have. Perth is on the right track with its plan to better diversify its economy, vacancy rates are the lowest they have been in four years with the rental market stabilizing and showing some great signs. This will be an interesting market for the years ahead.

Adelaide = Stable consistent rises over the years whilst still remaining affordable in most parts of the city have been a reason why for many Adelaide provides great value. Tight vacancy rates, stable conditions, great affordability, one of the fastest reducing unemployment rates in the country over the last few years have also been good signs for the city. BIS oxford economics also predicts Adelaide to be the top performing capital city market over the 3-5 years. If Adelaide can continue its momentum in the growth of other working industries to make up for any future shocks that could come in the manufacturing workforce it could continue its consistant and steady growth into the future without major disruption.

Tasmania = Hobart is approaching its peak, it is also one of the most unaffordable rental markets in Australia. Hence why many feel it is approaching its peak as what was once very affordable may not be moving ahead. Other parts of Tasmania are showing some great signs and are rising at strong rates, in coastal Tasmania markets I have seen yields in areas 12-18 months ago start to drop by up to 1-2% in actual yield figures, as they can’t keep with price growth in those areas.

Canberra = High incomes, infrastructure spend and commercial incentives make this an exciting market, although yield prospects on the residential side make only a few sub-markets viable. For investors with great cashflow already or that have a risk profile where they are open to lower yielding environments, with all the upside in Canberra this market may be of interest to them. These are some of the many reasons for why its considered a rising market. I have really been researching commercial property opportunities in this area too, due to this upside and investments. 

On the next property clock update, I will be going into only the regional and sub-regional capital markets.


Arjun Paliwal, Buyers Agent

Director – InvestorKit