Looking back on 2012's "inner city steals"

Looking back on 2012's "inner city steals"

Jessie RichardsonDecember 7, 2020

In June 2012, Smart Property Investment published a list of 20 inner-city suburbs where apartments were available for a "steal".

Each of the 20 suburbs were located within five kilometres of a capital CBD. One in four units in each suburb had to sell for $300,000 or less.

The magazine teamed up with an expert panel: Domain Group senior economist Andrew Wilson, SQM Research managing director Louis Christopher and RP Data senior research analyst Cameron Kusher. Together, they selected the suburbs, grouped them by states and ranked them on their potential for capital growth over five years.

A lot has happened since June 2012. Melbourne's apartment boom has continued to dizzying heights, Hobart had a surprisingly strong start to 2015, and Perth's price recovery in the wake of the mining boom has been more modest than some had hoped.

We're now halfway through the five year time horizon set out by the experts in June 2012, so Property Observer takes a look at how the inner city steals are performing. The updated median price and gross yield figures are taken from CoreLogic RP Data, as of the end of 2014. The vacancy rate figures are taken from SQM Research.

Hobart

Hobart's unit prices haven't fared so well in the last year – in fact, they've gone down in value, with Corelogic RP Data recording a 5.7% decrease in prices in the year to March. Of all the expert's Tasmanian picks, North Hobart has performed the best, with a median unit price of $375,000 at the end of 2014 compared to $312,000 in June 2012.

#20: South Hobart, Tasmania

Then:

Median price: $290,000
Gross rental yield: 5%
Vacancy rate: 4.4%

Now:

Median price: $297,500
Gross rental yield: 5%
Vacancy rate: 2%

#19 Sandy Bay, Tasmania

Then:

Median price: $377,500
Gross rental yield: 4%
Vacancy rate: 5.1%

Now:

Median price: $378,500
Gross rental yield: 4%
Vacancy rate: 2.2%

#18 West Hobart, Tasmania

Then:

Median price: $330,000
Gross rental yield: 5%
Vacancy rate: 3.9%

Now:

Median price: $317,000
Gross rental yield: 5%
Vacancy rate: 2.1%

#17 North Hobart, Tasmania

Then:

Median price: $312,000
Gross rental yield: 5%
Vacancy rate: 3.9%

Now:

Median price: $375,000
Gross rental yield: 5%
Vacancy rate: 2.1%

#16 New Town, Tasmania

Then:

Median price: $270,000
Gross rental yield: 5%
Vacancy rate: 2.4%

Now:

Median price: $240,000
Gross rental yield: 5%
Vacancy rate: 1.2%

Melbourne

Melbourne's inner city units have received a lot of press in the last two years, due to a particularly pronounced spike in approvals, and construction. The new crop of apartment towers has lead many to ask if the city has an oversupply problem, and may soon see a price correction.

As the suburbs of choice for many student renters, the inner city steals spotlighted all displayed seasonal spikes in vacancy rates around the summer holiday period.

#15 Melbourne, Victoria

Then:

Median price: $379,500
Gross rental yield: 6%
Vacancy rate: 4.6%

Now:

Median price: $445,000
Gross rental yield: 5%
Vacancy rate: 3.5%

#14 Carlton, Victoria

Then:

Median price: $297,500
Gross rental yield: 7%
Vacancy rate: 0.9%

Now:

Median price: $290,000
Gross rental yield: 7%
Vacancy rate: 2.9%

#13 North Melbourne, Victoria

Then:

Median price: $390,000
Gross rental yield: 5%
Vacancy rate: 1.9%

Now:

Median price: $495,000
Gross rental yield: 4%
Vacancy rate: 1.6%

Adelaide

The experts picked seven Adelaide suburbs for their list in 2012. They aren't the only ones that believe in the South Australian capital's potential: in July last year, observer Terry Ryder wrote that Adelaide was a "standout market". The city's unit prices increased by 2.6% in the year to March, according to CoreLogic RP Data.

#12 Rose Park, South Australia

Then:

Median price: $460,000
Gross rental yield: 5%
Vacancy rate: 1.1%

Now:

Median price: $447,000
Gross rental yield: 5%
Vacancy rate: 1.7%

#11 Keswick, South Australia

Then:

Median price: $240,000
Gross rental yield: 6%
Vacancy rate: 1.0%

Now:

Median price: $202,500 (last recorded)
Gross rental yield: 7%
Vacancy rate: 1.8%

#10 Ashford, South Australia

Then:

Median price: $291,000
Gross rental yield: 5%
Vacancy rate: 7.0%

Now:

Median price: $294,000
Gross rental yield: 5%
Vacancy rate: 1.8%

#9 Kent Town, South Australia

Then:

Median price: $505,000
Gross rental yield: 3%
Vacancy rate: 1.1%

Now:

Median price: $600,000
Gross rental yield: 3%
Vacancy rate: 1.7%

#8 Wayville, South Australia

Then:

Median price: $312,000
Gross rental yield: 5%
Vacancy rate: 0.8%

Now:

Median price: $608,500
Gross rental yield: 3%
Vacancy rate: 1.9%

#7 Goodwood, South Australia

Then:

Median price: $337,500
Gross rental yield: 4%
Vacancy rate: 0.9%

Now:

Median price: $388,000
Gross rental yield: 4%
Vacancy rate: 1.9%

#6 Mile End, South Australia

Then:

Median price: $390,000
Gross rental yield: 4%
Vacancy rate: 0.8%

Now:

Median price: $395,000
Gross rental yield: 5%
Vacancy rate: 0.9%

Sydney

Only one Sydney suburb made the inner city steals list, which makes sense given Sydney prices stand head and shoulders above the other capital cities. Just like the rest of Sydney, Ultimo has recorded strong growth in recent years – the median price of units at the end of 2014 is $63,500, or 15%, higher than it was in June 2012.

#5 Ultimo, New South Wales

Then:

Median price: $414,500
Gross rental yield: 6%
Vacancy rate: 1.3%

Now:

Median price: $478,000
Gross rental yield: 6%
Vacancy rate: 1.4%

Perth

Perth's inner city suburbs topped the list, with four picks. While the Kusher, Christopher and Wilson unanimously agreed that Perth's suburbs should rank highest, the results so far are mixed. Trendy Mount Lawley's end of 2014 median unit price is 16% higher than the June 2012's (with a similar result in North Perth). But in West Leederville, the median unit price is down, from $482,500 to $369,000, with the vacancy rate up from 0.9% to 2.4%.

#4 West Leederville, Western Australia

Then: