This assessment comes from Louis Christopher, SQM Research managing director, as the housing affordability squeeze takes its toll on Australians.
As a rule, investors should aim to buy a quality, well-located investment property, where future tenants would want to dwell. This is often true of suburbs near city centres.
But increasingly, properties in outer suburbs in Brisbane, Sydney and Melbourne are also posting good capital gains, as stronger population growth in outer suburbs and improving infrastructure forces up property demand, according to Mr Christopher.
“We have seen the outer suburbs in Melbourne, Sydney and Brisbane outperform the inner-city suburbs between 2012 and 2017, and that could continue, as low housing affordability, improving infrastructure and population growth are driving up property demand in outer suburban areas,” said Mr Christopher.
Data from the Australian Bureau of Statistics reveals that Cranbourne East had the largest growth in Australia in terms of numbers in 2017-18 (up by 7,300 people), while Rockbank - Mount Cottrell was the fastest growing in terms of its population growth rate at 59 per cent. Both of these areas are located in Melbourne’s outer suburbs.
Riverstone - Marsden Park, in Sydney’s outer suburbs, posted the nation’s third-highest population growth rate of 23.2 per cent in 2017-18.
But the smaller the city, the closer to the CBD you should aim to buy an investment property to ensure ongoing demand from renters, experts say. Indeed, Mr Christopher points out that in Adelaide, the inner-city suburbs performed better than outer-city suburbs in the most recent property boom. In Perth, all suburbs performed poorly given the city’s sharp correction in property prices following the mining boom.
Nest egg also considers Australia's Property Market.
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