PropertyOutlook2015 ScreenShotIt was a steady year in 2014 for Australia’s capital city residential property markets with the Reserve Bank of Australia’s efforts to jawbone the property market having little to no effect. 

Economists tipping another interest rate fall were proven correct in early February when the Reserve Bank cut the cash rate by .25% basis points to a new record low of 2.25%. These historically low rates combined with steady demand and buyer confidence suggests that the market will remain buoyant in 2015.

Following a successful spring and pent up demand during the festive holiday season, the New Year is tipped to open strong in most capital cities. But it’s unreasonable to assume that all markets will perform at the same pace – take Melbourne and Sydney for example, which grew by a whopping 12.4% and 7.6%, respectively, in 2014, compared with Brisbane, Adelaide and Perth, which all achieved growth under five percent.

The growth experienced in these and other cities is largely the work of record low interest rates, and strong interest from the investor class. However, each market and property type is also supported by a unique set of drivers that influence asset performance.


"It's unreasonable to assume that all markets will perform the same."


In Sydney and Melbourne, these include continued population growth and an undersupply of housing, as well as affordability and unemployment levels, which impact confidence levels. Meanwhile, Western Australia capital Perth is subject to an oversupply of housing and the performance of the resources sector, which is expected to experience further decline this year. Similarly, the performance of the Adelaide market is sensitive to rising unemployment as a result of decline in local manufacturing, and is impingent on sound affordability. The Gold Coast, and Brisbane to a lesser extent, are dependent on tourism, amongst other factors.

While each market and property type is unique, established houses and older style units and apartments located within close proximity to CBDs in major capital cities are considered among the best performing real estate. That’s typically because of their proximity to established infrastructure, such as schools, employment, recreational and lifestyle services, shopping facilities and transport networks. In 2015, this sub-sector of the residential market is once again expected to dominate.

On a state-by-state basis, Melbourne’s strongest performing sub-sector this year is likely to be established houses under $2 million within 10km of the CBD, while Sydney’s growing unaffordability means established houses under $2 million and within 11 to 20km of Sydney’s CBD are the likely winners. These sectors in particular are expected to perform well with growth ranging from 5 to 10 percent, underpinned by population growth and a limited supply of detached housing, which together drive competition and property growth.


"...established houses and older style units and apartments located within close proximity to CBDs in major capital cities are considered among the best performing real estate."


Comparatively, established property in Adelaide’s inner and middle-ring areas are tipped to be the best performers in the city, particularly the prestige market and houses under $1 million within 10km of the CBD – due largely to demand for blue-chip property off the back of attractive lending affordability. Likewise, Brisbane is predicted to see moderate growth of up to five percent in established houses in close proximity to the city’s CBD, following steady population growth and improved economic conditions in the state.

Of all the major cities, Perth is predicted to experience the least growth with the apartment market forecast to experience moderate decline, and limited growth in established houses in the short to medium term as the market absorbs an oversupply of property.

Despite a stable forecast for 2015, selecting property with sound capital growth is a complex process. Many factors including size, condition, suburb, street, lot location, orientation and broader economic conditions influence a property’s potential capital growth. Analysing a property’s historical performance is among the most important and effective ways to select an investment-grade property, so be sure to do your research before joining the ranks of a growing number of Australians now investing in residential property.

State Based Micro Forecast 2015

Melbourne

Property Type Forecast Growth
Modern units/apartmenets (legitimate sales, not off-the-plan)  0-4%
Established units/apartments  6-8%
Prestige market $5+ million  5-6%
Prestige market $2 -$5 million  6-8%
Estalished houses within 10km of CBD (under $2 million  7-9%
Established houses 11 - 20km from CBD (under $2 million)  5-6%
Holiday market  0-4%
Mortgage Belt (under $500k)  0-4%
Development sites  4-6%

 Sydney

Property Type Forecast Growth
Modern units/apartmenets (legitimate sales, not off-the-plan) 5%
Established units/apartments  5%
Prestige market $5+ million  -2-0%
Prestige market $2 -$5 million  0-5%
Estalished houses within 10km of CBD (under $2 million  5%
Established houses 11 - 20km from CBD (under $2 million)  5-10%
Holiday market  -5%
Mortgage Belt (under $500k)  0-5%
Development sites 10%

 Adelaide

Property Type Forecast Growth
Modern units/apartmenets (legitimate sales, not off-the-plan)  -1-2%
Established units/apartments  -2-2%
Prestige market $3+ million  1-4%
Prestige market $1.5 -$3 million  1-4%
Estalished houses within 10km of CBD (under $1 million  1-4%
Established houses 11 - 20km from CBD (under $1 million)  -1-2%
Holiday market  -2-2%
Mortgage Belt (under $500k)  -3-2%
Development sites  -5-0%

 Perth

Property Type Forecast Growth
Modern units/apartmenets (legitimate sales, not off-the-plan)  -5-0%
Established units/apartments  -5-0%
Prestige market $5+ million  -5-2%
Prestige market $2 -$5 million  -5-2%
Estalished houses within 10km of CBD (under $2 million  -2-3%
Established houses 11 - 20km from CBD (under $2 million)  0%
Holiday market  -5-0%
Mortgage Belt (under $500k)  -2-3%
Development sites  -2-3%

 Brisbane

Property Type Forecast Growth
Modern units/apartmenets (legitimate sales, not off-the-plan) 0-5%
Established units/apartments  0-5%
Prestige market $5+ million  steady
Prestige market $2 -$5 million  steady
Estalished houses within 10km of CBD (under $2 million  0-5%
Established houses 11 - 20km from CBD (under $2 million)  0-5%
Holiday market  steady
Mortgage Belt (under $500k)  0-5%
Development sites  steady


Like investors, homebuyers should invest in professional, independent and customised advice, if required, to assist with their home purchase.