Avoid Gold Coast, WA and Brisbane units for now: expert

Font size :

Investors who are looking to take advantage of the current buying opportunities in the property market should avoid areas that have further to fall, according to a leading property expert.

John Edwards, CEO of Residex, said that the housing markets across Australia are correcting and each capital city and state is suffering. But he noted that some areas offer better opportunities for bargain hunting than others.

"Sydney is the market which is furthest down the path of adjustment. There is every indication that it presents the best opportunity - along with Melbourne units - and has the lowest risk and highest likely statistical growth over the medium term," said Edwards. "This does not mean that you can buy anywhere in these markets and be assured of a good outcome. Some areas in these markets will make poor investments. A bargain in an area that fails to produce any growth and has a poor rental return is not worth having."

Edwards said that while the current environment offers opportunity for bargain hunting, segments in the markets which are further down the correction path will present little to no downside risk and will have stressed sellers.

"As a blanket rule, you should stay out of the Gold Coast, Western Australia and Brisbane markets unless you have done plenty of research. These markets will be ripe for the picking late in 2009 when they should be past their bottom, but currently they look as if the risks are too high. Sellers will still be holding unrealistic expectations."

When investing in the markets that have bottomed, Edwards offers the following tips:
* Any purchase needs to be at 'rock bottom' price. You are looking for bargains only. Remember, there are still risks on the horizon. You want to be in a situation where no matter what, you do not suffer losses. Even if a city has generally bottomed out, very large areas of that city will still have further adjustments to come. You have to identify the areas where these adjustments will be very minimal or where there will be growth.
* The total return is the important issue. You want investments that will provide growth. Lower levels of capital growth leads to a diminishing supply of properties, which results in higher rental returns. Decreasing interest rates coupled with increased rental returns presents lower levels of risk.
* Look for properties that have a quality position. By this, I do not mean views over rivers or harbours. It is about the needs in life for the tenant such as transport, shops and entertainment. Views in this environment will not save the 'value bacon'. Later in the growth cycle it will be time to better position yourself with these assets. The market still requires too high a premium for these attributes at the moment.

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Sep 20, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords