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 It is difficult to lump Australian states into an overall category of “bottom three states to invest in” since there are positive indicators for real estate investment in different areas within all states.

For example, Perth’s housing boom is beginning to deflate at 0.2%. However, having said this, rents have increased in Perth by 25 percent over the past year and 6 percent of this was during the last quarter. Furthermore, Perth housing prices have risen by 18 percent during this same period.

That such amazing growth is slower than during the previous year, still does not diminish the benefits of Australian real estate investing in Perth with the median rent increasing after December 2004 by approximately $44 per week. Yet, during the past year the number of days a residential property stayed on the market before selling rose from an average of thirty eight to eighty nine days.

In addition, in order to sell their properties vendors dropped their asking prices by an average of six percent as opposed to 3.5 percent previously.

So if you are a gambler and are prepared to risk how long high rents and capital growth will continue in Perth, keep it on your list of places to invest in. However, if you want a more secure, long term investment perhaps you need to look elsewhere.

For conservative investors, Western Australia should be considered one of the bottom three states to invest in.

Tasmania should also be considered one of the bottom three states to invest in.

It is a different case for home owners, with Tasmania having the most affordable housing in Australia and its residents experiencing the lowest national rate of mortgage related stress.

For Australian real estate investing, Tasmania is another matter. Prices in Hobart fell 1.6 percent last year and negative capital growth is obviously something to be avoided by investors. However, it must be said that during the period 2003–2006, the median house price in Hobart rose by 103% and according to Paul Braddick of the ANZ Bank the outlook for growth remains positive for 2008-2009.

Tasmanian housing prices are stabilizing and the market is returning to normal moderate growth patterns. The primary advantage of investing in Tasmanian real estate is the low entry cost for investors. However, expected returns on investment in terms of capital growth and rental returns is low compared to other states.

The Northern Territory, while not officially a state, should not be ignored, so it is included in the bottom three states for Australian real estate investing. The Northern Territory covers a large area and the only viable place to invest in is Darwin.

Darwin’s residential housing prices have shown excellent capital growth and it has the highest median rent in the nation for three bedroom houses at $395 per week. While this sounds excellent for investors, in terms of investment opportunities across the rest of Australia, The Northern Territory falls short.

For Australian real estate investing in the current market, Western Australia, Tasmania and The Northern Territory are the least attractive options for investors looking for long term capital gains along with the best possible rental returns.

However, within these markets there are still positive opportunities to profit from property investment. Just make sure you are fully informed and make your investment decisions with a long term view.

All the best in your Investing…

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