Unveiling Property Market Leaders: Adelaide, Brisbane, and Perth Forge Ahead in Growth, Yield, Rent Returns and Outlook
In a landscape where the overpriced local market has languished, it’s prudent for astute property investors to keep an eye on standout opportunities, because when some markets stall, others are booming. The recently released June 2023 House Price Report by Domain shows house prices have risen in all capital cities over the June quarter, except for Canberra. Some cities have outperformed, with Adelaide and Perth property markets growing and yielding the best, while their relative affordability in comparison to Sydney will allow for many years of very strong gains.
For educated property investors seeking insights and property investment tips, these cities present some of the best investment fundamentals seen in decades.
The growth in these three markets has shown acceleration in recent months, ranging between ten to eighteen percent on an annualised basis in many suburbs. This increase comes despite surging interest rates nearing their peak. The factors driving this growth include record-low vacancy rates, high immigration rates, and near-record low supply. As such, it’s highly probable that many suburbs in these markets will achieve growth rates near or above 20 percent per annum in the coming year or two, as rents and immigration continue to surge while interest rates moderate.
Many properties within these markets are generating yields exceeding six to ten percent, which translates to two to four times the net rental returns of most Sydney properties. Based on these rental market trends, the property investment market research is showing there has rarely been a better time to invest.
Adelaide: The Strongest Overall Investment Property Market
Adelaide’s property market is quietly asserting its presence, driven by high affordability and extraordinarily high government and private sector investments of circa $380B, around 12 times greater than the investment in Brisbane for the Olympics. With an annualised house price growth of 11.2 percent, Adelaide has crossed the $800,000 median house price mark for the first time. This robust growth signifies both market strength and the start of a long and exceptionally large boom cycle for Adelaide property.
Of note is the city’s strong performance during the June quarter, marked by the steepest quarterly price growth seen in over 15 years. Adelaide’s rental market also holds enormous potential, with rental values experiencing a 10.1 percent increase over the past year. Alongside a record low vacancy rate of 0.4 percent and a solid average rental yield of 4.1 percent (with some properties achieving yields of six to ten percent), Adelaide emerges as the standout investment destination within Australia.
Brisbane: Olympic Property Growth Underway
In the 11 years leading up to Sydney’s Olympics and a few years beyond, there was essentially a dual-phase property boom that witnessed growth of 240 percent. A similar trend for Brisbane’s property market is expected. Over the last two years, Brisbane has begun to experience substantial growth, and with a nine-year horizon ahead, the city’s robust job market, significant interstate and international migration, along with approximately $30 billion in infrastructure investments, have combined to propel its growth trajectory, a momentum expected to continue. For potential investors, Brisbane has yielded a remarkable 11 percent increase in rent over the past year. This, coupled with a strong yield of 4.3 percent, positions Brisbane as an enticing choice for those looking to invest wisely.
Perth: Revival Amidst Resources Boom
Perth has enjoyed an overdue uptick in property prices over the past couple of years. This resurgence is largely attributed to a period of virtually no growth for fifteen years, a more stable economic outlook and significantly increased activity in the resource sector. With an annualised growth rate of 8.8 percent over the last 12 months, coupled with a record low vacancy rate of 0.4 percent, the second highest residential yields in Australia, Perth’s housing market has shown resilience against higher interest rates. The increased demand for property is also influenced by renewed confidence among buyers and investors in the region’s potential for growth.
Factors such as much better affordability compared to the eastern seaboard, limited supply, ultra tight rental markets, and an extraordinarily strong resources sector outlook – partly due to the Ukraine War, where most countries have significant defence spending and need for resources, have all bolstered demand highly likely to continue for the medium to long term.
Rarely Have the Fundamentals and Outlook Been Better
The recent months have been a time of exciting opportunity for the more astute Australian property investors, with cities like Adelaide, Brisbane and Perth each displaying many of the strongest fundamentals these markets have ever seen. For savvy property investors, it’s essential to note that within these cities, sub-markets and particular types of properties may hold even greater potential for capital growth and yield, particularly when integrated into with wise property investment and finance strategies.
For those looking at investing in the property market, Informed decisions are paramount in navigating this landscape. Supported by inSynergy’s research-backed, data-driven strategies, investors can gain a clearer understanding of these market nuances and tailor their investment approaches accordingly. As the Australian property market trends continue to evolve, well-informed decisions based on advanced insights will play a pivotal role in maximising investment returns while also minimising risk.