Brisbane continues to be Australia’s No.1 residential property investment location, according to the latest Property Investor Market Update from Performance Property Advisory (PPA).


The report says other capital cities generally show lacklustre performance, although all have pockets worthy of investment.


The quarterly update examines property investment market conditions in Sydney, Melbourne, Brisbane and Adelaide, providing investors with an accurate insight into these cities and their many sub-markets.


PPA Director Acquisitions, David McMillan, says homes in Brisbane are showing strong investor value and will continue to do so thanks to the city’s ongoing population growth, low levels of unemployment (currently around 5.4%) and its continued undersupply of housing.


“Brisbane’s residential population has grown 27% over the past decade or so – from approximately 1.7 million to 2.1 million people – with an additional population increase of 820,000 projected over the next two decades,” McMillan says.


“Combine this with the fact that the infrastructure spend is up $1.07 billion on 2015 and you have a very positive story for Brisbane.”


Brisbane also remains one of Australia’s most affordable cities to invest in, with an Affordability Index’ of 27%.  The Affordability Index is a PPA calculation based on the average property price (assuming a 20% deposit) and the median income of that city.


“House prices rose by as little as 15% from 2008 to 2015 while income over the same period grew 31%. Couple this with falling interest rates and Brisbane’s residential stock remains extremely inexpensive.”


McMillan says this should lead to strong price rises in the short-to-medium term.


According to PPA, Brisbane’s choice investment prospects are in the city’s middle ring in the suburbs of Stafford, Kedron, Nundah, Mitchelton, Camp Hill and Morningside and to a limited extent in the city fringe and blue chip school belt.


McMillan cautions against investing in apartments in the CBD and on the city fringe as this market is transitioning from neutral to over-supply.


Adelaide also ranks relatively well in PPA’s Investor Market Update.


While the city’s property investment indicators are mixed, the city is very affordable for first-home buyers with rental growth now outpacing price growth.


Median yields are slightly higher than Brisbane and well above those available in Melbourne and Sydney.


McMillan says the best buys are in the city’s blue-chip school belt and its middle ring. However he cautions against the CBD and outer metro, urging investors to avoid off the plan which is showing no value and possible price falls in the short-term.


Melbourne is rated the second poorest performer among the major cities, with average yields of just 2.8%, marginally better than Sydney at 2.6% (based on purchases PPA has made for its clients).


However some of Melbourne’s sub-markets are well worth considering. These include the city’s so-called “lifestyle market” – coastal and tree-change locations within an hour’s drive of the city. These include areas such as Mornington, Mount Eliza, Frankston and Queenscliff.


The update shows that the Sydney market is now nearing its peak in terms of investment prospects.


“While demand for property is out-pacing supply, the market is starting to experience serious affordability issues which could see the average number of persons per household rising as people are forced to share rental accommodation.”


McMillan says Sydney has the lowest capital city yield, making it less attractive to experienced investors.


Despite this, there is some value for investors in the city’s ‘lifestyle” areas within 1.5 hours of the CBD – prime rental locations for those opting for a tree or sea change.