According to the latest Performance Property Advisory (PPA) Investor Market Update, homes in Brisbane remained high in investor value over the December quarter, while other capital cities showed “lacklustre performance”.
“Homes in Brisbane are showing strong investor value and will continue to do so thanks to the city’s ongoing population growth, low levels of unemployment (currently around 5.4 per cent) and its continued undersupply of housing,” PPA director of acquisitions David McMillan said.
“Brisbane’s residential population has grown by 27 per cent over the past decade or so – from approximately 1.7 million to 2.1 million people – with an additional population increase of 820,000 projected over the next two decades.
“Combine this with the fact that the infrastructure spend is up $1.07 billion on 2015 and you have a very positive story for Brisbane,” he said.
According to the update, Brisbane also remains one of Australia’s most affordable cities to invest in.
“House prices rose by as little as 15 per cent between 2008 and 2015 while income over the same period grew by approximately 31 per cent,” Mr McMillan said.
“Couple this with falling interest rates and Brisbane’s residential stock remains extremely inexpensive.”
However, Mr McMillan noted that he anticipates this materialising into strong price rises in the short to medium term.
The report also revealed that while Adelaide’s property investment indicators are mixed, the city remains very affordable for first home buyers, with rental growth now outpacing price growth.
Meanwhile, the PPA update showed that in terms of investment value, Victoria is Australia’s second poorest performer, with average yields of just 2.8 per cent – slightly higher than Sydney at 2.6 per cent.
The update also showed that the Sydney market is now nearing its peak in terms of investment prospects.
“While demand for property is out-pacing supply, the market is starting to experience serious affordability issues which could see the average number of persons per household rising as people are forced to shared rental accommodation,” Mr McMillan said.
With Sydney experiencing the lowest yield of the capital cities, it represents a less attractive option for experienced investors, he added.
[Related: Home loan demand surges]