Best Investment Property Locations In Australia

What are the best investment property locations in Australia for 2024?

This, of course, depends on many different data points and indicators that need to be thoroughly analysed.

To make a call on which investment property locations are worth investing this year, it’s really important to have a good understanding of the property market.

This includes the current and future performance of capital cities across the country as well as the leading indicators that can predict what is the right call when investing in the Australian property market.

Let’s look at the data to make sure we are making unbiased decisions.

The Residential Wealth Quantum in Australia

The Australian residential real estate sector is currently worth 10.3 trillion dollars. Of this, the amount of debt is $2.2 trillion, meaning there is only 19.8% LVR on the Australian residential market.

This shows a low debt environment, meaning the interest rate rises have not resulted in stress sales and foreclosures.

Australian Dwelling Values – 3 Month Changes

The change in dwelling values over three months to January 2024:

Australian housing has gone up 1%
Regional areas have gone up 1.2%
Combined capitals have gone 1.0%.

While values in regional areas in Northern Territory and Tasmania have not risen, other regional areas across each state generally improved. But overall regional areas are doing very well – not just a covid phenomenon!

A Deep Dive into the Capital Cities

Darwin is a hard one to pick. There always seem to be around 5-10 suburbs that seem investible.

But often Darwin is left for those with a higher risk appetite, as it can be all over the place and quite hard to pin down in terms of predicting success.

In January, dwelling values rose by 0.3% and were relatively flat over the past 12 months at 0.1% decrease in value.

Sydney property market values in January 2024 rose by 0.2% and 11.4% over the past year. While Sydney had a great 2023, the recent trend is quite shallow and the constant rising of interest rates have meant the price gains are likely due to give a little.

Dwelling values are now -2.4% below the record high which was in January 2022.

Melbourne has looked interesting, with a lot of potential value because it hasn’t grown over the last year – only 3.9%.

But it probably doesn’t look like the best time to invest right now, with values having declined by 0.1%.

Brisbane has seen 14.8% growth last year and recouped a lot of what it gave away in 2022. In January it grew by 1% in the last three months and I can see this trajectory continuing into the near future.

Adelaide continues to keep up the good fight – 10.3% growth over the last year and 1.1% growth in January.

I predict this will shallow out this year – and if not, we may be approaching bubble territory and see a pop in Adelaide.

Perth has seen a terrific 16.7% growth last year and 1.6% growth in January 2024.

Still a very affordable area as well, coupled with record high dwelling value (but likely has a long way to go).

Hobart has fallen slightly over the last 12 months (-0.4%) with a 0.7% drop in January.

This rate of fall isn’t slowing down either.

Canberra dwelling values have increased by 1.2% over the past year but declined by 0.2% over January.

Canberra is really trying to find its identity right now – the market just doesn’t know what to make of it, with a big risk that it could continue to fall.

Rental Market Trends and Indicators

Let’s look at some key indicators and market trends to get an idea of how to determine the best investment property locations.

Median days on market can be a really interesting leading indicator that shows how quickly houses are, from the point of listing, actually selling.

Lower median days on market suggests whether it’s a really hot market, where demand is strong.

There are some areas – Adelaide, Brisbane and Perth – where days on market have improved. This can be a key indicator of future price momentum.

Dwelling approvals. Remember supply is the enemy of growth.

The more dwellings approved means an increase in supply of housing units in the market.

Dips in dwelling approvals means housing prices will rise.

This is a major indicator that should be looked at closely when trying to determine the best places for investment property.

Finance & Lending is an important leading indicator. Generally, more finance approvals are an indication of more people willing and ready to buy.

An increase in finance approvals generally bodes well for house prices nationally.

Most booms or upward price movements in housing markets are foreshadowed by a spike in finance and lending approvals.

Too much investor activity, as opposed to fundamental long-term decisions made by owner-occupiers, can also be an indication of bubble areas.

For more of a breakdown of these indicators in each state and territory, check out the video below:

The bottom line…

When looking for the best places to buy property for investment in Australia, it’s also important to remember there are markets within markets.

While cities like Perth and Brisbane may be looking to grow the most, it’s about finding the right market within those cities and zeroing in on the right suburb.

Then there are of course regional areas that really have the potential to deliver.

It’s critical that you are equipped with the knowledge to properly analyse the data and look at all the key indicators (including those listed above) to predict the best places to invest in Australia