Growing profits for capital city properties highlight investment potential

By the resi financial blog team, 03 April 2014

Profits rise for property in Australias capitals

The latest RP Data-Rismark Home Value Index for March has illustrated the growing value of properties across the nation's capital cities. A number of potential investment opportunities could be present in the coming months, especially in the face of the population boom heading towards the country. 

With many migrants and interstate movers targeting metropolitan areas due to the developed infrastructure, job opportunities and strengthening economy, the chance to build up a decent property portfolio in the near future could be worth investigating for any smart buyers in Australia. 

After a lacklustre month in February, the Home Value Index recorded a resurgence of real estate strength in March, as capital city dwelling prices rose by 2.3 per cent across the nation. This increase boosted the overall growth of capital city prices up 3.5 per cent over the first quarter of 2014. 

In fact, over the last three months, every capital city except Perth recorded a growth in value. Melbourne saw the biggest jump, rising by 5.4 per cent, while Hobart (4.7 per cent), Sydney (4.4 per cent), Darwin (2.8 per cent), Canberra (2 per cent), Brisbane (1.5 per cent) and Adelaide (1.2 per cent) all saw varying degrees of their own increases. 

RP Data Research Director Tim Lawless stated these figures highlighted that half of Australia's capital cities were currently posting record high dwelling values - with Sydney, unsurprisingly, topping the list. 

"Sydney dwelling values are now 15.8 per cent higher than their previous peak, substantially more than Melbourne where dwelling values are 4.7 percent higher than their previous peak. Perth and Canberra values have risen to be 2.9 and 1.2 per cent higher than their previous high point, respectively," said Mr Lawless in an April 1 statement. 

Rismark's Managing Director Ben Skilbeck said these results shouldn't be surprising, with the nationwide auction clearance rates, consumer confidence levels and absence of any major economic setback in recent times allowing the housing market to flourish. He highlighted Brisbane as a particularly strong example. 

"Given this [Brisbane's] market remains 5.2 per cent below its previous peak and has one of the best rental yields of the capital cities, we've been looking for the commencement of relative out performance, in particular compared to Melbourne," said Mr Skilbeck in an April 1 statement. 

Interestingly, Mr Lawless pointed out that rental yields across the capital cities have tapered a little over recent times, with the typical house rental yield reaching only 3.8 per cent. Units were slightly higher than this, drawing in 4.6 per cent gross yield. 

As far as capital gain investment properties go, however, Australia's capital cities are currently posting some great results. With this growth expected to continue well into the remainder of the year, property investment could be a profitable avenue in the near future. 

Categories: Home Loans, Property Investment