FIVE INVESTMENT LOCATIONS POISED FOR GROWTH IN 2020

FIVE
INVESTMENT
 LOCATIONS
POISED FOR
 GROWTH IN
    2020

02 | INSYNERGY MARKET ANALYSIS - JAN 2020

CEO SUMMARY
inSynergys latest research has identified five investment
locations across the nation that are poised for price
growth this year. The analysis found four capital cities
and one major regional location as the best picks for
investors in 2020.

The five investment locations are Brisbane, Adelaide,
Canberra, Perth and the Sunshine Coast.

Each location has a number of strong market
fundamentals that will underpin property price
performance in the years ahead.

Property prices in the strongest markets over a six to
10-year growth cycle could increase by 80 per cent to
120 per cent while also enjoying higher yields at the
start of the cycle.

However, the worst performing markets could see
prices by slide by up to 20 per cent over the same
period, which means choosing the wrong location could
cost you dearly.

The five investment locations with the best potential
share affordability considerations, but also have a
number of other economic attributes that will see prices
start to firm sooner rather than later.

A big concern is that the recent price growth in Sydney
and Melbourne will falsely entice investors back to those
overpriced markets, when I don’t believe the current
supposed upswing will last long. The only exception
would perhaps be units in Melbourne as they are so
much more affordable than houses, as well as having one
of the biggest price differences between houses and
units we have ever seen in Australia.

The recent median dwelling price increases in our
nation’s two biggest capital cities were because of
higher priced properties selling rather than market
momentum across the board.

It really is the last gasp from the boom that ended
prematurely a few years ago, mainly because of tighter
lending conditions. Once those buyers have run out of
puff, and money, I believe median prices will return to
levels consistent with soft market conditions.

                   Richard Sheppard
                   CEO & Chief Property Investment Advisor

03 | INSYNERGY MARKET ANALYSIS - JAN 2020

BRISBANE
Brisbane’s affordability relative to incomes is one of its
strongest market indicators.

While Brisbane property prices are about 55 per cent of
Sydney’s, median household incomes in the Sunshine State
capital were only 12 per cent lower.

This is one of the reasons around 1,000 new residents are
shifting to Queensland every week, but it’s also because
Brisbane has about $15 billion in major infrastructure projects
either under way or approved.

Net rental returns are also about 50 per cent higher than
Sydney, which not only provides better cash flow and
borrowing capacity, but also is one of the better leading
indicators for future growth.

AREAS TO INVEST

Investors should consider the middle- and outer-rings of Greater Brisbane for houses,
because the boom has largely started in the inner-ring housing suburbs and is rippling
its way out.

Units in the inner-city should be considered because that market has bottomed out
and prices and rents are starting to strengthen again. The boom in units typically starts
in the CBD and higher demand areas, plus there are some exceptional new
infrastructure projects like Queen’s Wharf, Roma Street and the South Bank master plan
that are driving very strong employment and population growth in these areas.

The price differential between houses and units in Brisbane is also at record levels, so
that price gap will soon start to narrow.

For investment houses in Brisbane, buyers should consider Wynnum, Manly and Lota,
because, not only are they in the middle- to outer-ring areas, they offer lifestyle while
also being close to new and expanding infrastructure like the airport and port as well as
roads upgrades that will improve access to the CBD.

For units, investors should look at areas like West End, South Bank and Fortitude Valley,
partly due to the past high supply that kept prices back, but also due to the great
lifestyle that these areas offer.

04 | INSYNERGY MARKET ANALYSIS - JAN 2020

ADELAIDE
With a median house price of just $474,000, as well as $80 billion in
government defence spending, Adelaide is firmly on the radar of savvy
investors for this year.

BIS Oxford Economics has forecast price growth of 11 per cent
growth over the next three years for houses, which is second only
to Brisbane for Australian capital cities, however, we expect it to be
one of the best performing markets over the next 10 to
15 years as the Whyalla steel mill expansion, Olympic Dam
and $80 billion Navy frigate and submarine projects get into
full swing.

These are extremely large projects that will attract very strong
employment, wages and population growth, so after a slow 10
years for Adelaide property, leaving it relatively very
affordable, we should finally see a great run of growth for at
least a decade.

AREAS TO INVEST

Inner city suburbs in Adelaide such as Bowden and Kent Town are worthy of
consideration for investment units and townhouses, as they are likely to benefit from
more white-collar workers coming to the area.

Areas close to Port Adelaide should be considered for houses, townhouses and units due
to the potential benefits from urban renewal as well as the large upswing in workers
associated with the frigate and submarine projects nearby.

05 | INSYNERGY MARKET ANALYSIS - JAN 2020

CANBERRA
Canberra will continue to be one of the steadiest markets in
the country this year, largely due to its robust economy, job
opportunities, and the highest median incomes anywhere in
the country.

Canberra also has the strongest rental demand of any capital
city in the country, which will help to attract future
investment demand.

Investors can earn anywhere from five to seven per cent gross
rental yields for apartments, coupled with vacancy rates
currently sitting at just one per cent.

This also creates net rental returns about twice as high as
houses, especially when you take land tax into account as
there is no tax-free threshold in the ACT.

On top of that, the price differential between houses and units
is the largest it has ever been, with the median house price
$700,000 and the median unit price $440,000, which is even
more pronounced closer to the city.

When the price gap becomes so large, history shows us that
unit demand increases and prices along with it, especially
when rents are so much higher for units.

AREAS TO INVEST

For the reasons outlined above, we are only recommending
investment units and townhouses in Canberra.

Investors should consider areas like Turner, Braddon and
Kingston.

06 | INSYNERGY MARKET ANALYSIS - JAN 2020

PERTH
With Perth prices now about 23 per cent below their market peak in
2014, the Western Australian capital is showing potential.

Recent data has shown its median dwelling price finally
starting to strengthen, plus the resources sector has also
improved significantly.

At the end of the day, Perth is one of our major capital cities
and is home to nearly two million people, so its market was
never going to stay in the doldrums forever, plus investing
now, or by next year is better than investing anytime in the
past 12- plus years.

Perth now has the nation’s most affordable median house price
at about $456,000, according to CoreLogic. Gross rental yields
are also starting to improve with investors achieving
significantly superior yields to Sydney and Melbourne.

In Sydney, gross rental yields for houses are just 2.7 per cent, but in
Perth they are 4.2 per cent, so there is the opportunity there for
future capital growth as well as current solid cash flow.

AREAS TO INVEST

For investment houses and units in Perth, buyers should consider areas close to the city and the
coast as that is usually where the upswing in prices begins, before rippling further out.

07 | INSYNERGY MARKET ANALYSIS - JAN 2020

SUNSHINE COAST
The Sunshine coast property market is on the cusp of stronger
conditions after its sluggish economy held it back for a number
of years.

The region has a large number of major infrastructure projects
either under way or approved, however, one is set to change
its landscape more than most.

The new Maroochydore Town Centre will see 53 hectares of
land transformed into the region’s economic hub with
construction of the first building already under way.

That project as well as others, including the expansion of the
Sunshine Coast Airport’s runway, are destined to kickstart the
region’s property market, however, investors need to be
careful with location selection.

AREAS TO INVEST

Noosa is probably the most well-known part of the Sunshine Coast, but its market has
already enjoyed a number of years of price growth, so it is far too close to the end of its
growth cycle.

Also, geographically, it is a fair distance from the new town centre, so savvy investors
have been cherry-picking more affordable houses and units closer to where the city’s
future economic action will be.

While coastal suburbs may have a few years of good times left, they are potentially
halfway through their growth cycle. For this reason, investors should consider houses in
suburbs closer to Maroochydore, such as Buderim or even Peregian Springs.

Buyers should consider unit suburbs closer to Maroochydore but on the coast as well.
Units on the Sunshine Coast are only about part way through their growth cycle and
will likely benefit from the momentum in house growth as well as the higher demand
created by the town centre expansion.

Investors should consider units in suburbs such as Maroochydore, Mooloolaba and
Coolum.

08 | INSYNERGY MARKET ANALYSIS - JAN 2020

IMPORTANT NOTE
This document has been prepared by inSynergy Property Wealth Advisory Pty Ltd
(inSynergy).

The information including all estimates, calculations, opinions or recommendations
contained in this document have been provided in good faith and have been based on
information received from sources inSynergy has accepted in good faith.

No warranty is made as to the accuracy or reliability of any information contained in this
document and neither inSynergy nor any persons involved in the preparation of this
document accept any form of liability for its content. No returns or performance is
guaranteed. Any forecasts are dependent on the current market conditions and
knowledge available at the time of producing this document.

It should be noted that the information and advice we provide is specific to property
investment and mortgage finance and does not incorporate all of your financial needs and
considerations.

For all your other needs, we recommend you consult a licensed financial planner. If you
would us to recommend a financial planner that is skilled and experienced at building a
financial plan supportive of direct property investment, we would be happy to assist.

The information contained in this document is subject to change without notice. Updated
information can be obtained by contacting inSynergy on (02) 8051 8621 or by emailing
hello@inSynergy.net.au

www.inSynergy.net.au