The best property opportunities in 2015 – state by state

15th Feb 2015By: Peter Switzer

It’s no secret that residential real estate has had a great run up over the last two years. I started watching the improvement in prices and auction clearance numbers at the beginning of 2013 and if you’d entered the property market then, you would certainly be counting your capital gains now.

But even if you didn’t manage to get into the market early on, if you’re smart, you should always be able to find value in the market.

If you’re wondering what markets are going to do well over the next year, it pays to listen to the experts who make a living out of forecasting.

That’s why I asked Angie Zigomanis, senior manager for residential property at BIS Shrapnel, for his forecasts for major Australian cities. He says that we’re going to have to start looking north for opportunities this year.

BIS Shrapnel Forecast price growth FY15

Sydney 8% Darwin 1%
Melbourne 3% Newcastle 3%
Brisbane 6% Wollongong 6%
Adelaide 1% Sunshine Coast 1%
Perth -1% Gold Coast -1%
Canberra -1% Cairns -1%
Hobart 1%

Source: BIS Shrapnel

Sydney

Momentum should continue in the Sydney market.

“There will be growth in 2015 but not the kind of double-digit growth we’ve seen,” Zigomanis says.

Forecast growth for this financial year is still the strongest of any capital city at 8%, but it will start to progressively slow after that.

Melbourne

Growth in the Melbourne market is slowing and will edge lower towards 3% for this financial year.

“It has had a longer period of strong construction and we don’t think there’s as much pent up demand,” Zigomanis says.

Unfortunately, it has more economic headwinds than those facing Sydney.

Brisbane

Brisbane has some of the brightest prospects and the residential market there should strengthen over the next few years.

This is what Zigomanis has to say about the capital of the Sunshine State:

“There has been underbuilding for quite some time and vacancy rates are low and that says to us that activity should pick up.”

It’s probably still being stymied by muted economic conditions and the Newman government culled the number of public servants, which has impacted growth, but everything else is positive.

Adelaide

Unfortunately, there’s not much good news for the capital of South Australia and its real estate market will continue to be tough.

Perth

Western Australia is reeling from the wind down in the resources boom.

“We think prices will start to fall with a 1% decline and further declines in 2016 and possibly in 2017,” Zigomanis says.

Investment will continue to drop over the next two or three years.

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Canberra

It might be one of the more expensive cities for properties but values here are also expected to go backwards by 1% during this financial year and it could potentially fall even further.

Zigomanis says job cuts in the public sector won’t help either.

Hobart

Tasmania is doing it tough economically.

“We think migration out of Tasmania has improved but probably because there is nobody else left to leave,” Zigomanis says.

Employment is still soft and, economically speaking, there’s not a large number of opportunities.

Darwin

BIS Shrapnel forecasts just a 1% rise in the real estate market during the current financial year as mining investment has probably peaked.

“It’s also experiencing a slow down in big infrastructure projects and we’re starting to see that reflected in the property market,” Zigomanis says.

Newcastle and Wollongong

It’s the regional cities that might actually offer the best investment prospects this year. Both Newcastle and Wollongong have started to pick up now, and they’re benefiting from growth in the Sydney market as they’re close enough for commuters to Sydney.

“There is always a bit of an outflow from Sydney once housing becomes less affordable,” Zigomanis says.

Growth will start to pick up – to around 6% to 7% growth – and will be strong beyond the next 12 months.

Gold Coast and Sunshine Coast

Both these regions have had a dreary four or five years.

“We’re starting to see migration pick up into these areas and economically they are starting to look a bit better,” Zigomanis says.

The Sunshine Coast hospital, which was completed last year, is offering employment opportunities and on the Gold Coast there’s Commonwealth Games related activity, as well as the extension of Pacific Fair shopping centre.

Where will the opportunities be over the next 12 months?

When asked where he would invest over the next 12 months, Zigomanis points to South East Queensland and Brisbane over the Sunshine Coast or Gold Coast.

“Brisbane has a broader economic base. Within Brisbane, the inner suburbs are starting to do well,” he says.

Sydney is still experiencing strong growth. The outer Western suburbs remain the most affordable but they could possibly get ahead of themselves beyond the next 12 months. Liverpool and Penrith are the more affordable areas.

Zigomanis points out that the prices in inner Sydney rely on the stock market and businesses doing well.

“Your normal salary earners need to be on a very good wicket to be able to afford some of the top properties in Sydney,” he says.

So if I were looking to buy an investment property over the next year, I’d probably start looking north of the NSW border.

If you’re looking for an investment property, don’t ever be afraid to buy outside your area. A good income-earning property in another state could be a great investment but just make sure you do plenty of due diligence and make sure the area you’re buying in has at least two strong industries sustaining the market.

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