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Where to buy investment property in 2019

The hit and miss Australian real estate markets.

Senior Digital Journalist, Your Money

Editor’s note: The following article contains information only, it is not intended as personal or general advice. Your Money recommends getting professional advice specific to your personal circumstances.

With Sydney and Melbourne house prices continuing their decline and more homebuyers exiting our major cities, where should investors be looking to get a good deal in 2019?

According to property adviser Anna Porter, principal of Suburbanite, the answers may not be obvious.

Speaking to Your Money Live, Porter revealed her property picks over the next 12 months along with the spots that investors should avoid.

The 2019 hotspots

Porter says Adelaide is her top pick for property growth next year, thanks to a rising population and a number of job-creating projects, such as the billion-dollar Royal Adelaide Hospital.

“It’s a real win for Adelaide,” she said. “It’s at the right timing in the cycle in terms of that growth piece and it is one the most affordable markets in the country.”

“Those things are going to really fare well for Adelaide over the next 12 months and we’re going to see some really good growth come off the back of that,”

Porter named Canberra as her second 2019 hotspot, which she said will see growth once the election cools off.

“We see the first half of the year will be a little bit subdued we call it the election pause button… But once the elections come off we expect to see that market go from strength to strength again,” she explained.

While some analysts have been predicting a further downturn for the Brisbane market, Porter sees plenty of opportunity near and around the city for long-term investors.

“The good news for Brisbane is there are some billion dollar projects hitting the ground over the next few years. Not next year, but it will be the start of some good things to come,” Porter said.

“It’s got good internal migration, people get priced out of Sydney and Melbourne and they look to Brisbane.”

Areas to avoid

Tasmania has been heralded as a property hot zone in recent years, but according to Porter, 2019 will be its year of reckoning.

“My philosophy is that Hobart is likened to what the Gold Coast was in years gone by, and it’s a boom and bust market,” she said.

“It’s had a really strong 12 months… but we feel that in the next 12 months, or into 2020, that will come undone.”

The Hobart property boom has been driven by investors from other cities, according to Porter, one of the red flags for a property market.

“The locals aren’t driving that market, homebuyers aren’t driving that market, and that is a huge volatility. That is going to create vacancy issues over time,” she explained.

“The market just isn’t strong enough to push through interest rate rises and a changing economy.”

She said other places to be wary of next year include Darwin and Perth.

Sydney & Melbourne

Investors looking to buy in Sydney and Melbourne will need to have plenty of time on their hands, according to Porter.

“It will be two years of correction and four years of sitting flat before we start seeing growth again. So, potentially six years before you see growth. You have to be comfortable with that,” she said.

“They’re both in that stage in the cycle where they’re starting to correct.”

Although both major cities will continue to see high population growth by national standards, price growth will remain flat.

“Melbourne will start to turn a corner [in 2019] and anyone who has invested in Melbourne metro in the past six months will likely feel a bit of a sting in 2019,”

“Price growth in Sydney will not be strong, and we expect to see further declines in the middle-to-lower price points,” said Porter.

Watch the full interview in the video above.

Read more: City exodus drives record regional boom
More: Sydney growth hotspots to watch in 2019
More: What to do if your mortgage is ‘underwater’

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