The start of the year is a popular time to consider investment opportunities in the property market. However, identifying the major risks and potential opportunities associated with each property can be difficult.
Fortunately, uncertainties can be eliminated via informed risk assessments. By relying on risk assessments, property investors can arm themselves with the detailed risk information they’ll need to make smarter decisions.
Doron Peleg, co-founder of RiskWise Property Review, recently shared his insights on current and future market opportunities in Sydney, Melbourne, and Brisbane. Peleg’s company used a risk-return approach to identify individual properties that would deliver solid capital growth within the next 5-10 years. RiskWise Property Review also used the same approach to identify major risks that would impact the various capital city property markets.
The Harbour City is well-positioned to deliver strong capital growth in houses, particularly in the Eastern Suburbs and North Shore. The Northern Beaches, especially Manly and its surrounding suburbs, are also projected to deliver strong capital growth.
More affordable areas that are projected to deliver solid medium- and long-term capital growth include Wollongong and Newcastle.
Completed unit blocks and units-in-the-pipeline currently present a higher risk due to the potential lending restrictions imposed by the major lenders. This is especially true for unit blocks in the Sydney CBD, as well as the Inner South, Ryde, and Parramatta.
Melbourne’s strong economy and solid housing market are expected to deliver solid capital growth in the medium and long term. Suburbs that offer good value include Bentleigh (with a median price of $1.34m), Essendon ($1.2m), and Yarraville ($870,000).
Overall, the units market presents a significant risk due to the potential oversupply of units in inner Melbourne, with 35,560 units expected to be completed within the next few years.
Capital growth for housing is expected to be moderate in Brisbane. From a risk-return perspective, houses in established suburbs carry lower risks and solid potential return in the medium and long term. Examples include Ashgrove (with a median price of $857,000), The Gap ($628,000), Paddington ($947,000), Bardon ($875,000), and Indooroopilly ($850,000).
The units market is weak for both new developments and existing properties. It is highly probable that there’ll be a significant oversupply of units in inner Brisbane in the next few years, which will affect capital growth.
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