On December 27, 2016

2016: a year in review for property investment

2016 has been an interesting year, not least for the Australian property market.

While strong growth and capital gains has been the norm for almost every state and territory, what are some things first time property investors can take home as we bid goodbye to 2016 and move towards 2017?

Property continues to remain a popular and stable investment opportunity for Australian investors. If you are thinking of joining the one in five Australians who ING says own an investment property, here's what you should know about the current market trends and what to expect in the near future:

2016 saw positive growth for almost all Australian property markets.2016 saw positive growth for almost all Australian property markets.

Where has there been growth?

In their November 2016 Housing Market and Economic Update, CoreLogic RP Data reports that while the annual rate of capital gains have slowed in the Australian market, things are still trending upwards.

Over the past 12 months there's been a positive increase for all types of properties:

  • Houses (7.7 per cent)
  • Units (6.3 per cent)
  • Dwellings (7.5 per cent)

While the overall outlook this year has been good for property investors, unsurprisingly individual territories have performed differently than the national average. 

The last 12 months saw a positive change in capital city dwelling values with a combined increase of 7.5 per cent, yet according to CoreLogic, not everyone saw such a change. Sydney, Melbourne and Canberra were the top three performers ahead of the 7.5 per cent capital gains average for the capital cities. At the other end of the scale, Darwin and Perth saw negative growth compare to previous years:

  • Sydney retains the highest growth at 10.6 per cent higher than last year, with home values increasing by 2.9 per cent over the past three months.
  • Melbourne was the next big winner at a growth rate of 9.1 per cent. Home values here have increase 4.6 per cent over the past three months.
  • Canberra sits 7.9 per cent higher than last year, and the past three months have seen a 5.6 per cent jump in home values.
  • While Darwin home values have increase 4.0 per cent over the last three moths, the yearly growth has fallen -3.8 per cent.
  • Perth has seen both a -3.7% drop in capital gains and home values have fallen by -1.5 per cent these past three months.

On a larger scale, the Housing Industry Association's (HIA) ranks the eight states and territories each year in their Housing Scorecard, with New South Wales coming out on top yet again.

Senior HIA economist, Shane Garrett, explains the rankings:

"The large states dominate the top rankings in the latest HIA Housing Scorecard, with NSW extending its lead in first place thanks to a remarkable performance on the detached house side," he said.

Around one in five Australians own a least one investment property.

Mr Garrett goes on to explain that second place, Victoria, has been particularly strong for home renovations activity, with third place, Queensland, performing well for multi-units.

It would seem that many first home buyers and investors are being drawn towards the lifestyle, infrastructure and economic opportunity of the eastern coasts, which is correspondingly driving prices upwards and providing a positive outlook for people investing in the area.

Who's investing?

In the latest Financial Wellbeing Index by ING DIRECT, property is still a go-to investment option, with around one in five Australians saying they own a least one investment property.

The Index reports that despite signs the property market is slowing, demand for investment properties has continued to rise. NSW and WA lead the pack in terms of residents with an investment property (22 per cent). Nation-wide, the only state that achat viagra pour femme has seen a drop in investment properties compared to 2015 is South Australia (11 per cent).

"Property is a great opportunity to build wealth, but it definitely pays to do your research."

Interestingly, it would appear that Generation Y – young investors – are the most hungry for property, with a higher percentage owning an investment property than their older Gen X and Baby Boomer counterparts.

Mr Woolnough, Head of Third Party Distribution, ING DIRECT comments that, "Ultimately we're seeing that Australians still hold faith in the long term investment benefits of property. Property is a great opportunity to build wealth, but it definitely pays to do your research, take your time, speak to the experts."

What is the outlook like for investors?

We can expect to see a brief cooling off period in the property market for 2017, before rebounding a year or two down the track. Oversupply would appear to be a very real risk for places like Sydney and Melbourne, but could signal an opportunity for people looking to invest in property. An excess of housing will drive prices down, which in the high growth areas of NSW and VIC, it'll only be a short while before growth catches up.

With the right professional advice, you too can make a smart investment and get on board an industry that CoreLogic reports is worth over $6 trillion dollars.

To find out more, get in touch with our team today.

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