Australians pondering their Sydney or Melbourne property investment opportunities may be intrigued by the latest State of the States report from CommSec, which was released this month.
New South Wales is Australia's third-best economy, thanks to population growth and home building activity, while Victoria is standing out due to its strong population growth and housing finance activity.
Meanwhile, Master Builders Australia (MBA) has also provided useful commentary regarding building and construction activity across the nation, with useful forecasts for the three years ahead.
Big boost anticipated for residential building
Australian property investors adopt a range of strategies. For some, cash-flow positive properties are favourable, leading investors to seek out rental properties in areas with strong rental yields. Other real estate buyers will be intent on securing dwellings that are located in areas tipped for strong capital growth, often due to anticipated population growth and burgeoning local infrastructure.
MBA anticipates the value of residential building will increase from $51 billion (2013-14) to $68 billion (2016-17). That's a $17 billion spike over a three year period, potentially opening up a raft of investment options for savvy investors.
In a July 17 statement, MBA noted that a favourable pick-up in 2013-14 has paved the way for strong activity in the sector over the coming three years.
An eye on Sydney
Sydney remains a popular city for real estate investment, with dwelling prices rising 1.67 per cent month-on-month to June 30, according to the RP Data-Rismark Daily Home Value Index. Units prices alone experienced 3.92 per cent growth in the month to June.
Overall, dwelling prices have risen 15.45 per cent year-on-year to June 30 in the NSW capital.
"New South Wales remains third ranked with momentum provided by home building," CommSec explained in its July 2014 report.
Construction work is currently at levels higher than the state's 10-year average, with new home construction in particular showing promise:
"NSW remains the strongest in the nation for new home construction, with starts almost 45 per cent above decade averages. In addition in the March quarter the number of dwellings started was 19.6 per cent higher than a year earlier," CommSec stated.
Attention on Melbourne
The Victorian capital has proved itself as a solid real estate investment option, with dwelling prices lifting 1.78 per cent in the month to June, according to RP Data's index. All dwellings experienced 9.41 per cent price growth in the year to June 30.
Unit prices grew 2.67 per cent over the same period, and by 5.74 per cent year-on-year to June 30.
Investors want to ensure they've got a pick of tenants - population growth in Victoria makes investing in the state's capital city a wise option.
"Victoria is second strongest in annual population growth as well as the differential with the decade average rate. Victoria's population is 1.90 per cent higher than a year ago and this growth rate is 14.6 per cent higher than the normal or decade-average level," CommSec said.
According to the Australian Bureau of Statistics, national population growth to December was 1.7 per cent, indicating that Victoria is gunning ahead.
