Residential property still a solid asset

Despite the global pandemic and economic uncertainty, residential properties remain a reliable asset, according to Kevin Brogan, the National Director of Risk and Compliance at Herron Todd White Group. In the company’s monthly review, they asked their appraisers across the country, “What can I buy for $750,000?” and found interesting comparisons in all locations.

For instance, in Sydney and Wollongong, two vastly different markets, spending $750,000 yielded intriguing but apparent results. While buyers could purchase a four-bedroom, two-bathroom house in one location, the other could hardly provide a bed on a busy road (no prizes for guessing which is which).

By comparing current results with those from July 2020, HTW also gained insight into how markets have changed over time and the security that real estate investment brings. For example, in Western Sydney in 2020, $700,000 could buy a one-year-old two-bedroom unit in Parramatta or a standalone house with a granny flat in St Marys. Meanwhile, a two-bedroom unit in Marrickville cost $655,000. In 2023, buyers can still purchase a unit in Parramatta for $750,000, but it will be a few years newer than what they could have bought in 2020. The same two-bed unit in Marrickville will approach $750,000, and the St Marys house will be a small two-bed cottage that needs upgrading

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Similar situations can be seen in other areas. In Melbourne, for instance, new house and land packages in Glenroy, Fawkner, and Reservoir cost between $500,000 and $650,000 in 2020. However, by 2023, most standalone houses and even some townhouses will cost over $750,000.

Brogan said that buyers in Brisbane might face even higher prices. In 2020, ideal suburbs like Hendra, Woolowin, and Clayfield had entry-level pre- and post-war homes of 405 square meters for $700,000. By 2023, it will be almost unimaginable to buy a standalone house in these suburbs at that price. Older townhouses or unit blocks will be the only option. Additionally, in 2020, buyers could get quality secondhand standalone houses or newer townhouses in Stafford, Gordon Park, or Kedron. In today’s market, the chance of buying a spacious but poorly conditioned standalone house on a main road for $750,000 is slim.

Since 2022, rents have also risen in all of these markets, with many producing positive cash flow this year. All of this indicates that as long as buyers choose real estate based on sound fundamentals and reasonable independent advice, residential properties remain a reliable asset.

“History shows that those investing $750,000 today will be satisfied with their decision when they review it in 2026,” Brogan said.

The information provided is general information only and has been prepared without regard to your objectives, financial situation or needs. We recommend that you consider whether it is suitable for your situation. Before accepting any offer or offering, your full financial situation needs to be reviewed. This article does not constitute legal, tax or financial advice and you should always seek professional advice based on your individual circumstances. Fees and charges and eligibility criteria apply, subject to the lender’s terms and conditions.

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