Capital growth has become a key focus for investors as Australia’s property market continues its remarkable rise. At this time last year, very few people could have predicted the extent of this growth, but the latest data from CoreLogic shows historic increases in dwelling values across the country. In fact, price growth in the quarter to April 2021 was the highest since December 1998 — a clear indication of the market’s strength and capital growth potential.
Despite the challenges of the past 15 months, confidence in the property market remains high. Property investment consultants have noted that current predictions suggest prices will keep rising throughout this year and well into 2022, creating even more opportunities for investors seeking strong capital growth.
All available data points to the fact that, despite early fears at the onset of Covid-19 in 2020, now is actually an ideal time to invest in property. By entering the market now, ideally with the guidance of a buyers agent, investors can take advantage of the impressive capital growth potential and secure long-term financial gains.
Where can I invest in capital growth properties?
According to CoreLogic, national home values grew by 6.8% in the quarter to April 2021. In the year to April 2021, they are 7.8% higher, the largest recorded growth in a twelve-month period, largely driven by owner-occupiers and first home buyers entering the market.
This was accompanied by a 22.6% increase in sales volumes over the same period, and a proportional uplift in investor financing for property purchases in March 2021 in all states and territories (except ACT).
The best-performing capital cities included average price rises of 5.6% in Brisbane, 5.8% in Melbourne and an impressive 8.8% in Sydney. Engaging a buyers agent can greatly assist investors in navigating these competitive markets. However, while the data shows opportunities all over the country, it is in regional areas where the capital growth rate could be most significant going forward.
For instance, in regional Queensland, home values in the April 2021 quarter rose by 6.1%, while the rises were 7.1% and 7.4% in regional Victoria and NSW respectively. Engaging a buyers agent Gold Coast-based could be particularly advantageous, given the region’s booming popularity.
In short, the overall market picture is that there haven’t been opportunities for regional capital growth investment like this in a generation.
Why should I invest in regional areas?
Despite similar percentage rises in house prices in capitals and regional areas, it nevertheless remains more affordable to buy property outside of capital cities. Seeking the advice of a professional property buyers agent can significantly improve your chances of securing the best investment opportunities.
At the same time, investors cannot afford to delay regional property investment decisions. As a result of Covid-19, demand in country areas has clearly increased, as people from larger cities look for more space indoors and outdoors.
Therefore, the best suburbs for capital growth are likely to be located outside major urban conurbations. Consulting a property investment advisor, for instance, can help investors identify these strategic opportunities early, before regional prices rise even further over the next year or so.
Rise in regional rents
There has also been a commensurate rise in national rent values over the same period, including 10.9% in regional Queensland, 6.8% in regional Victoria, and 9.0% in regional NSW, where popular regions are expected to outperform even the Sydney property market.
However, despite rising rents, there has been a downward trend in rental yields (typical when rents increase significantly). Average yields (as of April 2021) are 5.1% in regional Queensland, 4.1% in regional Victoria, and 4.2% in regional NSW.
Therefore, investors looking to buy in regional Australia are better off focusing on capital growth properties that will produce returns over the longer term, rather than seeking positively geared, high-yield investments. Consulting with a buyers agent can ensure investors understand the balance between long-term capital gains and short-term yield strategies.
Now is the time to take advantage of capital growth property investment
With interest rates at historic lows and the Reserve Bank expecting no significant rises until 2024, there are numerous opportunities for capital growth property investment across the country.
However, intervention by authorities to slow the boom, such as restricting low-deposit loans or limiting investor finance loan-to-value ratios, is possible. This potential risk reinforces why engaging a buyers agent or a property investment consultant is crucial for investors looking to capitalise quickly on the current exceptional market conditions.