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Investment opportunities as capital city property values increase

On Sep 03 2013
Tagged as:
  • Residential

The real estate landscape is ripe for property investment, as the latest RP Data Rismark August ...

The real estate landscape is ripe for property investment, as the latest RP Data Rismark August Hedonic Home Value Index report highlights the upward trend in property values, which could present a great opportunity to secure real estate in a strengthening market.

August saw a capital city dwelling value increase of 0.5 per cent. While this may seem small, when taken in conjunction with the June (1.9 per cent) and July (1.6 per cent) increases, the rolling increase across the country reaches four per cent - the highest capital gain over three months since April 2010.

Sydney was recorded as the best performing capital city of the quarter, with the dwelling values increasing by 5.4 per cent. Likewise, it also recorded the most expensive median house price, reaching $587,000.

The highest rental yields across the country for the last quarter were found in Darwin, with a rental yield of 6.1 per cent for houses and 6.3 per cent for units. Purchasing residential real estate in the state could be a fantastic opportunity to acquire a profitable, secure investment property.

Tim Lawless, research director for RP Data, stated that the reduced value increase during August was a good sign, indicating that the market was gearing towards a slower, more sustainable recovery effort.

"The half a per cent gain over the month of August is a much more sustainable rate of growth and will be a welcome turn of events for policy makers," said Mr Lawless in a September 2 release.

"While the recent surge in dwelling values has caused some renewed debate about an Australian housing bubble, it is important to remember that the average annual capital gain over the past decade has been just 4.3 per cent across the combined capital cities."

The report also looks at the best performing areas of the market, which found that the mid-priced section of the market had recorded the biggest increase in capital gains, growing by 5.2 per cent since the start of the year.

The most expensive quartile of the market experienced a growth of 4.9 per cent, while the most affordable recorded the lowest increase in capital gain, growing by 4.4 per cent over 2013.

Spring has also been predicted to show some exceptional growth throughout the season, with Rismark chief executive officer Ben Skilbeck stating that investors and owner-occupiers alike could benefit from the market.

"While the owner-occupier segment of the market is more than twice the size of the investor segment, there continues to be a number of indicators suggesting that this spring investors will be punching above their weight," said Mr Silbeck.

"With year-on-year gross total returns being 10 per cent across the combined capital cities (11.7 per cent in Sydney), and borrowing costs close to half of this, it’s likely investors will continue to the attracted into the market."

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