Should property investors consider buying in Melbourne, regional Victoria, and South Australia?
As the Sydney property market starts to slow down, property investors are on the lookout for areas where their money can work hard—are Melbourne, Victoria, and South Australia the places to be at the moment?
Investing in Melbourne
Melbourne has pockets that may give good opportunities to property investors, but in general, the cash flow generated by properties in the area are quite poor, ranging only from 3 per cent to 4 per cent. However, despite the poor cash flow in the area, Steve believes that there is more growth coming into its property markets.
However, he explained: “Not a lot [though because while] immigration numbers are very, very big … [the] cash flow is poor.”
“You can have all the growth in the world, but if you haven't got the cash flow to support [the growth] … you’ve got nothing,” the buyer’s agent added.
If you have already bought in the area, hold on to your assets and hope for the best. For property investors who want to take the risk and enter the market, concentrate on detached dwellings instead of units, or buy a block or a duplex pair so you can eventually add value to your investment property.
Investing in regional Victoria
There are a lot of opportunities present in the regional areas of Victoria as infrastructures get better and “the whole affordability scenario pushes further out from metropolitan areas”.
According to Steve, more accommodations are needed now, especially as most parts of Melbourne start to become more expensive.
Investing in South Australia
Like regional Victoria, South Australia is also teeming with opportunities for property investors. Consumer confidence has started to perpetuate in the area, especially in places close to the central business district.
Steve said: “That's done very well for us. [It is a] nice entry point in terms of price and the cash flow is [at] 6.5 per cent, sometimes 7 per cent.”
Adelaide is also a reasonably safe location for investing in properties as the market has remained consistent over a period of time. The key to success in South Australia, according to the buyer’s agent, is to buy well.
“[Buy] better than everybody else. It just gives you that little bit of mitigation, it gives you a kick along in terms of your equity position,” he said.
As the government is set to spend $195 billion in Defence for the next decade, Adelaide is expected to experience huge job growth because the submarines and warships will be built in surrounding areas.
Tune in to Phil Tarrant’s portfolio update on The Smart Property Investment Show to know more about the current state of different Australian property markets and where they are headed, as well as the best suburb for your next investment property.
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