Published at: 8/26/2016 10:48:07 AM
Investing interstate can add valuable diversity to your property portfolio – we help you nail the hotspots.
When it comes to investing in property it’s a fair bet you have your local market sorted in terms of market values, realistic rents and which properties offer tenant appeal. However if you already own your home or you have other rental investments in the area, it could be time to invest in entirely different location.
You see, while you may feel comfortable investing in your local patch, it can bring the risk of being overexposed to one particular market.
Conditions impacting the property market in individual states, regions and suburbs differ widely across Australia, and the drivers underpinning capital growth in one location may be quite different to other areas.
This explains why no single location is a consistent outperformer, and investing interstate can bring valuable diversity to your property portfolio.
The big question is where to invest
The key to successfully investing interstate is to look for areas with a diverse local economy, a growing population, strong transport links and plenty of local amenities. It may sound like a tall order but these qualities may support long term capital growth plus tenant demand.
Following a period of rapid price growth in many parts of Australia, the latest Residential Property Prospects Report from research group BIS Shrapnel predicts relatively flat markets across many states over the next three years.
There are exceptions though - and it could pay for interstate investors to follow the sun.
Queensland expected to shine brightly
BIS Shrapnel is expecting Brisbane to dish up the strongest house price growth nationally over the next three years with the city’s median house price forecast to rise by a total of 13% by 2018. This reflects rising buyer confidence coupled with Brisbane’s greater affordability relative to Sydney and Melbourne.
Gold Coast and Sunshine Coast look promising
The same report predicts future price growth of 13-12% for Queensland’s Gold Coast and Sunshine Coast markets between now and 2018.
Both locations have seen very little construction activity in recent years following market doldrums, but a number of large-scale projects including the Pacific Fair shopping precinct, the Commonwealth Games in the Gold Coast, and the new Sunshine Coast University Hospital are contributing to local employment prospects.
The far north Queensland city of Cairns also offers some upside for investors with potential property 3-years price growth totalling 11%. This reflects an uptick in tourism supported by a weaker Australian dollar.
Investors considering New South Wales markets may want to look beyond Sydney to the satellites cities of Wollongong and Newcastle. Here, 3-year capital growth is predicted to be in the order of 10% and 15% respectively as Sydneysiders seek more affordable housing options.
Investing across states adds diversity and can also produce cost savings as stamp duty and land tax regimes different across states and territories.
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