Property investors wondering where to put their money in 2016 should look to Hobart, Gold Coast and Melbourne – and avoid Perth, SQM Research’s Louis Christopher said.
“We believe that Melbourne will be the out-performer of the year, followed by the Gold Coast and Hobart. Each of these respective cities are benefiting from the lower Australian dollar,” he said.
Economic improvements led by the Tasmanian government and a falling unemployment rate has driven demand in the rental market in Hobart. Rents will grow 5 to 8 per cent next year as vacancies fall.
“Holiday destinations are looking very good now for landlords. Gold Coast has a potential of 7 to 11 per cent capital growth and rental yield growing to 8 per cent.” Vacancies are down in the Gold Coast, similar to Hobart.
While the RBA cautioned on “housing oversupply” in Melbourne in its latest Financial Stability Review, Mr Christopher was not concerned, as statistics indicate a robust Melbourne market.
“I cannot ignore the data: falling vacancy and accelerating rents in Melbourne,” he said.
“There may be oversupply in certain pockets such as the Docklands but the population growth in Melbourne is still quite strong.”
The Melbourne housing market is forecast to grow by 8 to 13 per cent.
Mr Christopher said buyers should avoid Darwin, which will have rent declines of up to 12 per cent, and Perth, which is still in a downward price correction.