Property Investment in Australia – How’s the Market?

AFL’s grand final is only weeks away – and that markets the traditional Spring selling season in Victoria and the rest of Australia. The spring buyer are out in force in the Melbourne property market – but is this the sign of better things to come in the Australian property market – or just another false dawn?

The threat is that interest rates will be going up by the end of the year – but maybe a potential property Australian purchaser. According to the Real Estate’s industry website – domain.com.au things are starting to look up – and they point out that prices have risen across all Australian states for the whole of 2009. Of course they have forgotten about what happened for the previous few years.

With a shortage of homes and a consequential increase in rents – the age old question of whether to rent or buy is now starting to persuade people to buy. AFG’s Mortgage Index also suggests that nearly a quarter of all new mortgages written in 2009 are for those who are trading up their home rather than new home buyers or loan refinances.

So short-term at least the signs are more hopeful than they have been for a quite a while. The issue then arises – where to buy? Australians are a mobile bunch and although many may want to buy in the suburb they grew up in, many will move city or state in order to pursue work opportunities.

Buying in a new town is always daunting but there are some interesting figures out froma  recent studycommissioned by St George Bank and conducted by RP Data. They looked at Australia’s major cities and tried to pick the best value suburb. What does value mean in this contest? Well if you are a fan of the open-home circuit and the new property for sale pages in the press you might have thought that it was all about the size of the home-theatre room and the bathroom tile finishes. You’d be wrong. Instead the study took the view that at the end of the day – location is still what matters with real estate. The tiles you can upgrade – the distance of your home from the CBD is more difficult to fix.     Transport links and local shopping were also considered important as well as renovation potential.

So where should you be looking for value for money if you are moving interstate:

Perth CBD from south of the Swan River

Sydney – Granville (median price $347,500)

Melbourne – Brunswick $532,000

Brisbane – Margate $347,000

Adelaide – Thebarton $391,250

Perth – Thornlie $365,000

Hobart – North Hobart $335,000

Darwin – Rapid Creek $523,000

Canberra – Dickson $505,000

In Perth an entry-level price point according to the new home developers is around $450,000 – think outside the square and you have a much cheaper home and a few hours a day less wasted on the city commute. As always when considering property investment in Australia - use your head not your heart!