The true cost and performance of individual residential property investment and the implication on real estate agency practice

Abstract

Investment in residential property in Australia is not dominated by the major investment institutions in to the same degree as the commercial, industrial and retail property markets. As at December 2001, the Property Council of Australia Investment Performance Index contained residential property with a total value of $235 million, which represents only 0.3% of the total PCA Performance Index value. The majority of investment in the Australian residential property market is by small investment companies and individual investors.

The limited exposure of residential property in the institutional investment portfolios has also limited the research that has been undertaken in relation to residential property performance. However the importance of individual investment in residential property is continuing to gain importance as both individuals are now taking control of their own superannuation portfolios and the various State Governments of Australia are decreasing their involvement in the construction of public housing by subsidizing low-income families into the private residential property market.

This paper will:

• Provide a comparison of the cost to initially purchase residential property in the various capital city residential property markets in Australia, and

• Analyse the true cost and investment performance of residential property in the main residential property markets in Australia based on a standard investment portfolio in each of the State capital cities and relate these results to real estate marketing and agency practice.