Mixed returns for investors in Australia’s capital cities

Posted: 24 January 2017 12:49 pm

property investorHobart and Perth are seeing declines.

Sydney and Melbourne have become almost completely untouchable for those looking to get their start on the property ladder. This has led buyers to look to other capital cities for their property portfolio but Domain data reported by the Australian Financial Review shows that not all cities are worth it.

The figures show that the return on investment (ROI) for properties in some of Australia’s capital cities has gone down for the December 2016 quarter. ROI in Perth has dropped 0.7% for houses, with a larger drop of 1.7% for units.

Hobart has also seen a drop in quarter-on-quarter returns for both houses and units with a drop of 0.6% for houses and a marginally larger drop of 0.8% for units. Other cities had a mixed change. Darwin, for instance, had a small drop of 0.3% for houses but a jump of 0.1% for units. Brisbane saw a drop of 0.5% for units but an increase of 0.4% for houses.

Housing prices won't slow until 2018

All other cities saw an increase across both houses and units with Canberra jumping by 2.2% on the ROI of units and 1.1% for houses. Adelaide also saw a larger increase when purchasing a unit with a jump of 2.1% compared to a 0.6% increase when purchasing a house.

Sydney and Melbourne have just landed themselves on the top 10 least affordable major cities and these figures from Domain help to show why. Sydney saw an increase on ROI of 1.1% on houses and 1% on units,while Melbourne boasted 1.8% growth for houses and 2.8% for units.

Along with the data on purchasing in each capital city AFR reported that Domain had separate figures that showed rental increases were also causing concern. Median rents on houses rose by 1.9% to $540 in Sydney and by 2.5% to $410 in Melbourne leaving renters out of pocket more and with less money to put towards a possible deposit.

Picture: Shutterstock

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