After two years of unprecedented growth, Australia’s property market has changed course, with prices cooling and demand easing across the country.

According to the latest PropTrack data, nationwide property prices dropped 0.11% in May to a new median of $691,000 in what was the first month-on-month decline since the pandemic began.

Property Price Downturn

Prices continued to decline in Sydney (-0.29%) and Melbourne (-0.27%), while prices in Canberra were down for the first time in 3 years.

And monthly price growth has slowed almost everywhere across the country, with regional areas seeing a flat result in May with a mere 0.01% increase for the month.

And there could be more price falls to come with further rate cuts expected throughout the remainder of 2022.

It’s never been more important, then, for property investors to focus on investment-grade properties in the right suburbs – because it is these properties that are able to better weather a market downturn.

As an investor, it’s important to understand that location does most of the heavy lifting for your real estate investment success.

Of course, we already know that most properties are not “investment grade” and without the right, due diligence you could end up buying the wrong property in the wrong area at the wrong time.

This could mean you face years of slow or no growth or worse, no income due to a high vacancy in the area.

And that’s why data such as Finder.com.au’s latest analysis is so interesting.

Their new Property Investment Index has revealed Sydney and Melbourne’s safest and riskiest suburbs for home buyers and investors during the current downturn, with lower-density inner- and middle-ring areas forecast to be top performers.

Sydney’s ‘safe’ and ‘risky’ suburbs

The new Property Investment Index shows that house prices in Sydney’s Cammeray, Redfern, and Wahroonga would be the most resilient suburbs during the downturn.

These suburbs have universal appeal among buyers because of their proximity to the CBD and transport links, good schools, and shortage of available housing.

Higher median house prices in these areas also suggest these suburbs attract higher net worth buyers who would likely be less affected by interest rate hikes and associated increased home loan repayment costs.

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Narraweena and Davidson in the northern beaches and Rozelle, Erskineville, and Earlwood in the inner west are also flagged as areas likely to hold their value.

Meanwhile, on the flip side, the data shows that suburbs, where the property is less likely to hold its value, seem to be high-rise construction hubs with an oversupply of apartments.

They included Wolli Creek, near the airport, Olympic Park, and parts of the Greater Parramatta area such as Mays Hill, Harris Park, and Rosehill.

The index also revealed that smaller apartments in outer fringe suburbs (where housing is traditionally larger houses on sizeable blocks) are also expected to be weaker performers unlikely to hold their value as the market quietens.

Melbourne’s ‘safe’ and ‘risky’ suburbs

Finder’s new index reveals that in Melbourne, houses in Alphington, Aberfeldie, and Carnegie show the most potential for maintaining stable prices.

Top 10 highest scoring Melbourne suburbs

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The 3 top suburbs are spread across the northeast, northwest, and southeast of the city however what they do have in common is their close proximity to Melbourne’s CBD (7-12km), good transport links, and wealth of amenities.




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