For many Australians, purchasing a property is one of the most important decisions they will make in their lives.
A recent report highlights some factors to consider, and identifies some hotspots.
With the recent volatility in the share markets, many people are again showing interest in property as an investment class.
Here are some interesting statistics:
Price changes. The share market dropped by 54% from its peak in late 2007 to its trough in March 2009 while dwelling values recorded a decline of 3.9% from their February 2008 peak to the bottom of the market in December 2008.
Housing recovery. Since December 2008, Australian median dwelling values have rebounded and, as at the end of June, they sit at their highest ever level of $471,800. During the last 12 months all mainland Australian capital city markets have recorded increases in their median dwelling values.
Share price recovery. The share market has also recovered from its trough but remains more than 30% off its peak.
Owner occupied loans. Housing finance commitments to owner occupiers has been recovering strongly. The number of loans extended for owner occupied housing has risen in nine of the last ten months and stands 25% higher than a year ago.
Investor loans. Investor finance commitments remain at much lower levels and account for around a quarter of all housing finance commitments. The two most recent months have seen finance commitments for investment housing retreat.
Population growth. In raw number terms, population growth has never been greater with Australia’s population growing by more than 406,000 persons for the year to December 2008. An increasing population fuels demand for housing.
Key features
Important factors to consider when deciding where to buy a home include:
Price of the property. Buyers should look to purchase in areas within their budget and those that provide a quality/value proposition.
Understand an area and take into consideration important items such as road infrastructure, public transport options, shopping facilities, health care and schooling. All of these aspects will impact on the level of capital growth the suburb experiences.
Demographic mix of a prospective area. Is the population of the area increasing or decreasing, what income levels most households fall within, are there many children in the area, etc.
Housing characteristics of the area. Is the housing stock mainly units or detached houses or a mix of both? Further, what is the amount of housing supply both now and in the future?
24 property hotspots
The National Hotspots Report, compiled by RP Data and released in September 2009, has identified 24 “better value” suburbs around Australia that are likely to provide a strong value proposition. The suburbs identified should suit both buyers looking to live in the home and investors seeking capital growth over the medium to long term.
The hotspots chosen on a region by region basis are:
- Sydney: Granville, Rockdale, Lidcombe, Riverwood, Waterloo
- Melbourne: Brunswick, Ashburton, Chadstone, Flemington, Fawkner
- Brisbane: Margate, Keperra, Cannon Hill, Fairfield, Kedron
- Adelaide: Thebarton, Glanville
- Perth: Bassendean, Thornlie
- Hobart: North Hobart
- Darwin: Rapid Creek
- Canberra: Dickson
- Regional Australia: Gulliver (Qld), Redan (Vic)
According to the Report, the strong common thread amongst the majority of picks was strong relative pricing; renovation potential; and close proximity to retail and transport amenity.
These features, along with all of those previously detailed, are extremely important to consider prior to any purchase decision, especially when the owner is seeking future capital appreciation.
The Report confirms that many opportunities still exist to buy well located, affordable properties in capital cities and regional areas. The hotspots identified above are some of the better opportunities, but not the only ones.
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