Regional towns with strong economies, Brisbane and several tourist hotspots in Queensland are among the property markets in Australia showing short-term promise in 2015, say experts.
With prices peaking in many parts of Sydney and Melbourne, Canberra facing an oversupply of housing and Perth running out of steam post-mining boom, Robert Mellor, managing director of research group BIS Shrapnel, is predicting big things for Brisbane.
“Sydney’s probably got a little bit of growth left in it, but there’s not another 20 per cent. It will maybe be eight per cent in the next 12 or 18 months and then it will start to slow. Over a five-year period, I’d say Brisbane’s going to outperform it.”
He suggests buying in established suburbs five to 10 kilometres out of Brisbane’s CBD, and avoiding large apartment towers being built in the heart of the city.
Likewise, Mr Mellor, along with other experts, also recommends steering clear of high-rise apartment complexes in Melbourne and Sydney’s CBD, warning of potential oversaturation of the market.
Time to look north
Back to Queensland, and Mr Mellor believes tourist areas which have been slow in recent years, such as Cairns, the Gold Coast and the Sunshine Coast, could also see price rises.
“Cairns is likely to see solid recovery, but not as significant as Brisbane or the Gold Coast or the Sunshine Coast,” he says.
John Lindeman, director of research firm Property Power Partners, believes areas such as Cairns – the closest Australian airport to many Chinese cities – will benefit from the predicted boom in Chinese tourists.
He says areas such as WA’s Margaret River region and South Australia’s Kangaroo Island could also see strong boosts in tourist numbers, along with the Gold Coast, which he says has “been languishing for a long time”.
Mr Lindeman says the boost in Chinese tourists, helped by the falling Aussie dollar, will bring more tourism workers to those areas, who will need somewhere to live.
Meanwhile, he believes that prices on the periphery of capital cities will see growth, as first-home buyers get pushed out of more established suburbs by sky-high prices.
In Melbourne, for example, he points to areas such as Melton, Bacchus Marsh, Berwick and Cranbourne as potential winners this year.
The baby boomer effect
At the other end of the market, many baby boomers looking to retire in the next few years will sell their ‘nest egg’ to fund their retirement, he says.
“One third of housing stock is owned by people who are 55 and over.”
Many are likely to move to cheaper areas two or three hours from capital cities, boosting prices in those areas, he predicts.
The south coast of New South Wales, or areas in Victoria such as the Mornington Peninsula, East Gippsland or the Yarra Ranges, may benefit.
Don’t dismiss regional Australia
Mark Kelman, who owns 15 investment properties and authored the book Become a Property Millionaire in your Spare Time, believes it’s going to be a big year for regional areas.
“I reckon all the regional areas that have a reasonable economy are actually going to start moving,” he says.
Mr Kelman believes investors will turn their attention from chasing capital growth in the cities, to cash flow positive properties in regional centres.
He recommends researching towns that have “good, multiple sources of employment” and populations of more than 10,000 people – preferably growing.
Anything with upside, such as new roads being built, new shopping centres, or companies moving there, might show promise.
Mr Mellor says markets that have lagged behind Sydney, such as Wollongong and Newcastle, will continue to see solid growth, and probably outperform Sydney in the next two to three years.
The south west coast of Western Australia may see a rise, while regional Victorian towns such as Bendigo and Ballarat may get a boost off the back of an improved regional rail system.
Do your own research
Meanwhile, Mr Kelman recommends doing your own research by inspecting a number of properties, talking to the local council about projects underway, and speaking to locals including real estate property managers to find out the types of properties people want to rent in the area.
“Whenever you buy property you’ve got to take into consideration who’s going to rent it and who’s going to buy it from you,” he says.