Since 2004, Darwin has been the best performing capital city for property growth while Sydney has fared the worst. Richard Sheppard outlines the key reasons for this difference and demonstrates how you can identify the next growth markets.
While many people disregarded Darwin as an isolated resources boomtown that was too risky to invest in, the fact remains that, since 2004, it outperformed the Sydney market by a massive 107 per cent. In dollar terms, that would equate to $535,000 more equity on a property purchased for $500,000. Every other capital city has outperformed Sydney since 2004, with Canberra at 33 per cent, Brisbane at 41 per cent, Hobart at 47 per cent, Adelaide at 58 per cent and Perth at 86 per cent.
Even Canberra as the second worst performer, with 33 per cent growth had 17 per cent more growth than Sydney, which on a $500,000 property is $85,000 more growth. With that $85,000, you could buy a second property or invest in other assets, which could then provide far more growth by retirement age. This clearly shows how differently the markets can perform over time and how important it is to invest in good research and advice in order to significantly improve your chances of better returns.
So why did Darwin perform so well and how can you identify the next growth markets? Two ways – market fundamentals and macroeconomics.
It was no fluke that Darwin and the other capitals performed better. For qualified property economists, there were clear signs these markets were likely to perform better. These indicators included better yields, vacancy rates, undersupply, population and employment growth, infrastructure and economic development. While you could spend a lot of time getting into the detail, I believe your time can be far better spent looking into who the best independent providers of this research are.
Few could argue that BIS Shrapnel is the best independent provider of macroeconomic residential property research and forecasts in Australia. BIS Shrapnel employs an experienced team of property economists with masters and doctorates in land economics, and their economic credentials are valued by some of the largest development, property and finance-related organisations in the country.
It’s worth noting that some of their research is available for a relatively small cost or through good property investment advisers. Arming yourself with this research, plus some good advice from a property adviser, can pay huge dividends in the end.
Richard Sheppard is the Managing Director of inSynergy Property and Finance Solutions. inSynergy is a licensed investment property buyers’ agent that provides professional property investment advice, property market research and specialised mortgage broking services. Phone 1300 308 808 or visit insynergy.net.au.