SQM Research Predicts 10%+ Growth in Sydney & Melbourne in 2020

Very professional assessment, Redom. Although the rate becomes lower, other conditions are not as good as what we had in the previous boom, tight lending policies, worse economic conditions, higher supply/demand ratio, etc.

 

Buying a property in Syd/Mel now will still be a good move if you hold it for 10+ years. The risk is much lower compared to 2 years ago. However, I think Brisbane and Perth probably will deliver better capital growth and cash flow in the same period.

 

We are thinking to sell our IP in Melb next year once lease is up in Feb.....

 

Interested to hear more about why you believe Perth market has better capital growth prospects than Syd and Melb long term. I'm very new to the property investment scene and looking to by my first IP very soon. Some great looking bargains in some Perth suburbs with valuations cheaper than their 2010 sale prices in some cases. Not sure if i can see the population increases and mining activity etc necessary to fire things up yet but the market looks very tempting. I don't want to catch a falling knife though.

 

It depends on your goals. If you want to have some instant capital gains in 2-3 years, some regional locations in Tasmania and Victoria possibly will deliver better gains than the capital cities in the short term as these locations have already started to boom and could last for a couple of years. However, if you are looking at long-term 10+ years of investment, I think Brisbane and Perth can deliver better long term gains. I believe the Perth market has pretty much reached its bottom. There are a couple of reasons: 1. vacancy rate has fallen to 2.9%. It was peaked at about 5.5% in 2016. 2. Stock on the market is falling 3. mining is recovering. 4. properties are very affordable considering the income level of the people living in Perth. I think the growth will be slow and steady in the first couple of years, therefore, there is no need to rush. One thing you need to be aware of is that the Perth market is strongly tied to the mining industry and can be volatile. Nevertheless, considering that the median property price is lower what it was 10 years ago, the risk of investing in that market is very low.

 

Hi Mark, I am new to property investing, just curious about this comparison between Perth vs Sydney/Melbourne, still there are outer areas around an hour+ in Melbourne where I see the median price is close to the price points in Perth, and risk is lesser in the Eastern cities compared to Perth? And if we look at longer term of 10 year plus wouldnt it make sense to buy in these larger populated cities with more demand? Just my thoughts..

 

You can find $500k properties within 10 mins drive from Perth CBD. Perth is still a big city with 2 million population. When its economy recovers, the prices of properties will certainly go up. Perth's property market fluctuates more than other cities, which are less reliant on the mining industry. However, at the current price point, I think it presents good buying opportunities. If you have not bought in Brisbane and do not want big ups and downs, it is probably better to buy in Brisbane first before moving to Perth as Brisbane has a more diverse economy.

 

Thank you, I have bought Brisbane, hence the predicament.