Bargain Hunt Changes Focus In Patchy Market

Sun Herald

Sunday June 8, 2008

Alex May

Investors may be looking elsewhere for better returns, writes Alex May.

AUSTRALIA'S residential property market is patchy, with median house prices in cities such as Brisbane, Melbourne and Adelaide jumping by almost 20 per cent in the 12 months to March, while housing in Perth, Hobart and Sydney languishes.

Rismark International research head Matthew Hardman says Sydney house and apartment prices have fallen 4 per cent overall since 2004, which means investors could be looking to the rest of the country for better opportunities.

Australian Property Monitors predicts rent rises in most Australian capitals, with talk that Sydney rents will rise by as much as 50 per cent over the next four years.

But APM's general manager, Michael McNamara, says: "The party is definitely over for property investors, at least for now."

Terry Ryder, founder of hotspotting.com.au, says investment opportunities abound and he looks to basics such as population growth, infrastructure projects and affordability to predict the next real-estate hot spots.

QUEENSLAND

Median Brisbane house price - March 2008: $439,210, up 18.4 per cent since March 2007.

Proportion of income required to meet average rent: 26.5 per cent.

Proportion of income required to meet average loan repayments: 40.5 per cent.

With Queensland taking over from NSW as the most unaffordable place to own a home in the March 2008 REIA Housing Affordability survey, it would appear that investment opportunities may be limited - but many experts still think there's room for growth there.

Terry Ryder picks the Lockyer Valley town of Gatton - where a new jail is being built - and Bargara, a coastal town near Bundaberg, as two Queensland hot spots.

Both towns offer houses in the $200,000-$300,000 price range, he says.

Rismark's Dr Hardman says Brisbane still has room for further growth, especially in suburbs close to the city and river.

VICTORIA

Median Melbourne house price - March 2008: $443,203, up 18.3percent since March 2007.

Proportion of income required to meet average rent: 21.8 per cent.

Proportion of income required to meet average loan repayments: 37.9 per cent.

Melbourne house price growth started easing at the beginning of this year, with Mr McNamara saying the market is sensitive to interest rises.

Dr Hardman says suburbs close to Melbourne's Tullamarine airport have been suffering price falls and are to be avoided. Melbourne is still undervalued compared to Sydney and Brisbane and Mr Ryder picks Footscray and Coburg in Melbourne as growth suburbs to watch.

SOUTH AUSTRALIA

Median Adelaide house price - March 2008: $411,885, up 19.6 per cent since March 2007.

Proportion of income required to meet average rent: 25.5 per cent.

Proportion of income needed to meet average loan repayments: 36.8 per cent.

With the resources boom just beginning to take off in South Australia, Mr Ryder is picking this state as offering Australia's best investment opportunities in the next 12 months.

"There is population growth for the first time and the resources projects are just starting to crank up, which will create more jobs and more demand for housing," he says.

He also selects the remote far west town of Ceduna could boom, thanks to new mines in the area, and has Whyalla as a town to watch.

WESTERN AUSTRALIA

Median Perth house price - March 2008: $513,771, up 1.5 per cent since March 2007.

Proportion of income required to meet average rent: 22.5 per cent.

Proportion of income required to meet average loan repayments: 34 per cent.

With the second-highest house prices in the country, Western Australia has affordability problems, says Mr Ryder. "It's had its boom and I can't see a lot of opportunities. Even remote towns like Karratha and Broome have houses priced around $600,000, which is expensive," he says.

Geraldton may have opportunities with plans for a new port.

NORTHERN TERRITORY

Median Darwin house price - March 2008: $463,560, up 10.7 per cent since March 2007.

Proportion of income required to meet average rent: 28.1 per cent.

Proportion of income required to meet average loan repayments: 23 per cent.

Dr Hardman says established apartments around the bay in Darwin could offer some potential for growth but warns investors to avoid over-priced new developments.

ACT

Median Canberra house price - March 2008: $494,456, up 10.4 per cent since March 2007.

Proportion of income required to meet average rent: 17.5 per cent.

Proportion of income required to meet average loan repayments: 22.4 per cent.

With unit prices dropping 3 per cent in the March quarter, Mr McNamara says investment opportunities there may be limited.

TASMANIA

Median Hobart house price - March 2008: $268,773, up 4.3 per cent since March 2007.

Proportion of income required to meet average rent: 29.5 per cent.

Proportion of income required to meet average loan repayments: 35.3 per cent.

Renters in Tasmania are the worst off in Australia, the REIA's new Housing Affordability report says.

It is still one of the most affordable places to buy real estate in Australia, and experts say it will remain an attractive place for retirees.

© 2008 Sun Herald

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