Buy the gems before they go up: Residex

The property market looks to be bottoming out, meaning things are about to begin to improve, according to Residex forecaster John Edwards, who has pinpointed 29 areas where growth has been above 4% in the past three months.

Edwards suggests there had been strong growth in Fawkner, Carlton and Campbellfield in melbourne, and Girraween, Canterbury, North Sydney and Artarmon in Sydney.

Many rural towns including Dubbo in NSW and Bendigo are in Edwards’s list.

He notes about 62% of the suburbs identified have a median value of less than $500,000 and about 30% have a median value of less than $350,000.

“Affordability is again playing its part in growth,” he says.

“It should be clear that no matter what the greater market is doing, there are always gems to be found.

“However, it is important to remember a current ‘gem’ is just that, current, and the opportunity to maximise returns has passed.

“We need to find the locations that are predicted to grow, just before they become ‘gems’ to make the most out of an investment,” Edwards says.

Edwards notes that across Australia growth, in real terms, is lower than normal, “so if history is any guide to the future, we can expect it to rebound”.

“Given long-term real rates and low inflation of about 2% to 3% , the longer-term nominal growth should be, on average, around 6% per annum,” he says.

Edwards suggests there are markets across Australia currently doing very well, although Australia’s median price eased 0.38% during May, and is down 0.29% in the past three months to sit at $441,500.

The biggest decline during May was Hobart, down 1.77% to a $374,000 median.

Perth had the best jump in May up 0.72% to a $485,000 median, according to Residex.