Property markets may be predicted to stabilise in 2014, but the latest report shows some inner city suburbs are set to thrive over the next five years.

New research from Onthehouse’s property data arm Residex shows every capital city has strong opportunities for growth, despite often being much more expensive compared to their suburban counterparts.

The suburbs which made the national top 10 predicted for growth include Sydney’s Bellevue Hill, Melbourne’s Malvern, Brisbane’s Bulimba and Perth’s City Beach. They all have estimated annual average growth rates over the next five years greater than 8%.

However, John Edwards, consulting analyst at Onthehouse, warned that Sydney and Melbourne’s growth rates should slowdown in the next six months.

“From a national perspective, I’m expecting to see commentary from the RBA later this year that will affect consumer sentiment and again moderate growth,” he said.

“This will mean changes in the recent strong national growth trends. Property investors will need to be cautious about which suburbs they invest in – particularly in inner city areas, which will deliver a very mixed bag of returns.

“Stable growth never occurs in a linear way. Overall, we expect to see a fall in growth by the end of the year, followed by two to three years of minimal to zero growth. Then by 2018, we are expecting to see a return to strong growth rates.”

House value growth – top suburbs for the next 5 years

 

City Suburb Median Value Capital Growth,

Last Year

 Rental Yield,

Last Year

 Predictions,

5 Year % p.a.

Sydney BELLEVUE HILL $3,384,500 1.31% 2.69% 10%+
Melbourne MALVERN $1,674,500 7.68% 3.26% 10%+
Sydney ROSE BAY $2,319,000 3.37% 2.62% 10%+
Brisbane BULIMBA $897,500 4.29% 4.47% 10%+
Melbourne ELWOOD $1,382,500 12.29% 3.41% 9%+
Sydney MOSMAN $2,454,500 12.73% 3.60% 9%+
Perth CITY BEACH $1,851,000 12.80% 3.30% 9%+
Brisbane NEW FARM $1,170,500 6.65% 3.58% 9%+
Melbourne ST KILDA $1,125,000 17.19% 3.71% 9%+
Perth MOUNT PLEASANT $1,295,000 5.77% 3.10% 8%+
                                                                                    Source: Onthehouse.com.au / Residex

Unit value growth – top suburbs for the next five years

 

City Suburb Median Value Capital Growth, Last Year Rental Yield, Last Year Predictions,

5 Year % p.a. 

Melbourne ELWOOD $532,000 6.12% 4.13% 8%+
Melbourne ST KILDA $465,500 6.18% 4.51% 7%+
Melbourne RICHMOND $507,000 6.41% 4.63% 7%+
Sydney NORTH BONDI $752,500 12.07% 4.69% 5%+
Sydney MILSONS POINT $1,061,500 15.43% 4.43% 5%+
Perth SUBIACO $632,500 3.82% 4.88% 4%+
Perth CLAREMONT $700,000 0.36% 4.48% 4%+
Perth WEST PERTH $537,000 2.81% 5.67% 4%+
Brisbane WEST END $489,500 6.12% 5.31% 4%+
Brisbane NEW FARM $501,000 5.17% 5.11% 4%+
                                                                                    Source: Onthehouse.com.au / Residex

The rise of Melbourne

In the unit sector, Melbourne commands the top three positions on value growth to 2019, including Elwood, St Kilda and Richmond.

Edwards argued that demand in Melbourne is currently being propped up by three main factors.

 

  • Property developers are managing their units well.
  • International buyers are supporting new unit sales.
  • Higher public confidence is being driven by factors like good clearance rates at auction.
“Anybody buying property over the next 12 months needs to be aware of the growth patterns, now more than ever it is important to do solid research around the market to back up your decisions with data and insight,” said Edwards.