Raine & Horne: What can we expect over the next 12 months?

Written by Angus Raine in Investment on February 4, 2013

While there have been challenges in 2012, I’m pleased to say we are also seeing signs that the real estate market across Australia is returning to form, a trend we expect to continue this year. In fact, across NSW, many of Raine & Horne’s offices are reporting that home sales have picked up by between six and eight percent, with properties valued around a suburb or town’s median price point generally the best performers. Above the median, it’s fair to say activity has been patchy and hard to read in 2012, and this situation will continue over the next 12 months.

We also expect that strong rental yields, which grew at 20% in 2012, will keep the Darwin real estate market front and centre with investors looking for growth.


Key opportunities in the market

If you’re looking for long term growth in 2013, then ‘unfashionable suburbs’, enjoying proximity to high quality facilities such as schools, shopping precincts, business districts, plus excellent transport and road systems, could prove the next big thing.

We’ve seen it all before with suburbs such as Sydney’s Paddington and Newtown, which in the past struggled to tempt investor interest. Yet their proximity to local cafés, dining and entertainment strips have since won them over.

Semaphore in Adelaide’s west, which experienced a 40% increase in property sales in the June quarter, is a more contemporary example of this phenomenon. The rise of Semaphore is undoubtedly linked to its median sale price of $535,000, which makes it a more affordable alternative compared to other prestigious seaside suburbs such as Henley Beach ($605,000) or Grange ($577,000).

Another location on the cusp of growth is Palmerston in Darwin’s south. With Darwin’s CBD fast becoming unaffordable for many residents, new developments in Palmerston are offering an affordable alternative, with two bedroom apartments starting from around $340,000. Raine & Horne Darwin is anticipating capital values in Palmerston to increase by 20% by March 2013, while houses in the growth suburb are generating rental yields in excess of 5%.


Hot suburbs to keep an eye on


Michael Baliviera, State Franchise Manager of Raine & Horne Victoria, is suggesting suburbs in Melbourne’s north-west such as North Melbourne, Ascot Vale, Brunswick and Footscray will be in the sights of investors in the first weeks of 2013, with homes valued between $600,000 and $650,000 sure to attract plenty of attention.


One and two bedroom units in Sydney’s Bondi Junction will be hot property for investors next year. Tony Laing, Co-Principal of Raine & Horne Bondi Junction, says that one bedroom units start from $450,000 and can generate net yields between 5% and 6%, while two bedroom units are on the market from $600,000.


Larry Gallagher, Principal of Raine & Horne North Perth, is urging cashed up investors to focus on the ‘forgotten suburbs’ of Perth such as Embelton and Ashfield, which are close to Perth’s CBD, as they are more affordable than homes in surrounding suburbs.