'Property over shares' and the two cities investors should be looking towards

Property is shaping as the most secure property investment type for the next ten years, with two Australian property markets standing out in a period of low supply and rapidly rising rents.

Perth and the Gold Coast are seen as two real estate markets primed for investors looking for long term gains.
Perth and the Gold Coast are seen as two real estate markets primed for investors looking for long term gains.
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Perth and the Gold Coast are seen as two real estate markets primed for investors looking for long term gains. (Image source: Shutterstock.com)

Property remains the most secure investment choice, with the country’s fourth and sixth largest cities identified as the two producing the best investment outlook.

Increasingly for investors, they are confronted with the question, “where is the best place to invest?”

Of course, there is the option of leaving your money in the bank, which still pays low interest and has its capital value eaten away by inflation, or the stock market that we know has been going through record levels regularly, but with the slowing economy we will see yields affected and share prices more volatile.

There are private equity funds, crypto and a whole range of other investment options. But increasingly in a volatile world, people come back to bricks and mortar.

However, where to invest in property also has a lot of question marks attached.

The latest data has shown that in most areas other than South East Queensland, the migration to regional areas has not only stopped, but it is in reverse with many people moving back to the cities. Perth is also experiencing record population growth.

In a state like Victoria, which is so heavily debt ladened that they’ve had to introduced new or increased taxes, it’s made investing in Victoria far less attractive than any other state in Australia.

As such, while there are some outstanding locations to invest in property, doing your research and following publications such as Australian Property Investor Magazine, is important in identifying the best investment options.

It’s great to see the latest Australian Bureau of Statistics housing finance figures, which show for March an increase in investors entering the market place.

Investor housing finance rose 3.8 per cent to 10.2 billion, which was 31.1 per cent higher than a year ago.

Fundamentally, real estate will be in an incredibly strong position at least for the next 10 years.

It will take that long with concerted effort to see our housing crisis ease.

Currently, it gets worse week by week and we are unlikely to see any signs of a much needed supply increase over the next three years.

So, real estate will be supported by the most basic of needs, which is that every Australian needs a roof over their head and they need to either buy it or rent it. If they rent, then they need landlords to invest in those properties.

Rental crisis not abating

In the latest report published by Domain, capital city house rentals have recorded their biggest quarterly increase in 17 years and the second-highest increase on record.

We have to remember that whenever viewing short-term movement in markets, you should also take into consideration the longer-term trend as there can be swings and turns in the market.

In the decade prior to the recent dramatic increases there was a relatively flat period in which rents did not increase at all.

Over a 10-year timeframe, we are seeing that the recent increases were largely a catch up and not a case of some landlords capitalising opportunistically on the incredible shortage of rental properties in the marketplace.

Where to invest in real estate

For those who have owned properties for any length of time, they are indeed being rewarded for their longer view on holding rental properties.

It is a fitting example for all investors that real estate is always a long-term investment and should not be considered as a short or medium term one.

As an investor, if you want the greatest degree of security, then owning a property is far superior to a share scrip.

Pick your markets wisely. Pick the areas with the strongest growth potential.

Currently, Perth and the Gold Coast are standout choices in a market showing so many shifts.

Article Q&A

Where should property investors be looking for the best returns?

API Magazine columnist Andrew Bell has identified Perth and the Gold Coast as the standout choices in a real estate market showing so many shifts, with growing populations and a lack of supply driving their property markets long term.

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