A survey by mortgage broker Mortgage Choice showed Queensland is tipped to have the greatest capital growth potential for property for the next five years, followed by Victoria then Western Australia.
Next on the list are South Australia, NSW, Tasmania, Northern Territory and the ACT, in that order. Of course there are likely to be good and bad investments in each state and territory, due to several reasons. Rod Cornish, Macquarie Real Estate's head of property research, says higher interest rates are starting to affect prices in Melbourne, Brisbane and Adelaide after a surge in growth last year.
The Perth market is also starting to slow after several years of rising prices. Sydney prices remain weak but high migration, low supply and continuing demand for people living close to the city will underpin the market.
In all cities investors should look to where the rental growth is going to be strongest and sustained, which generally means close to the city.
"Areas where there is a shortage of supply and close to the water will be the outstanding performers," Cornish says.
In terms of property types, people want places they can stay for longer, with plenty of adaptable space and a good aspect.
"An investor should be thinking more like an owner-occupier than they would have 10 years ago," Cornish says.
Property investor Steve McKnight says that instead of concentrating on location in isolation, it's better to focus on what will make the suburb more appealing in years to come. This means thinking about the next buyer who'll buy from the investor when he or she decides to sell.
"That way the investor can tailor the investment to suit a particular purchaser's needs and therefore command a premium price," McKnight says.
Features that accelerate growth include access to schools, shops and transport, lifestyle appeal, the extent to which the area is landlocked, proximity to employment opportunities and general desirability of the suburb.
