Read time: 4 minutes, 03 seconds. Buying a home is a big decision. For first-time buyers, making such a large investment can be overwhelming. Especially, if you have no idea what to look for when...
Investment Hotspots – Where To Be Looking And Why
It’s been a pretty strange past year and a half or so. With the pandemic came the lockdowns and as a result, a lot of sectors went on hold. The Australian real estate industry, though, beat the odds and continued to thrive.
In all honesty, at one point, it seemed like investors were pretty reluctant to get back to business as usual. Even today, some investors are still holding out on that decision.
“It’s strange that investors have been so reluctant to get into the market because it’s a fantastic time to be an investment property owner, to be a landlord.” – Terry Ryder, Property Analyst
Interest rates are still at the lowest they’ve ever been. Right now, the average variable interest rate in Australia is under 4% and the average fixed rate is still under 3%. Just quietly though…if you’re paying more, then you might need to speak with MLS Finance to help fix that.
As we make our way through 2021, we can see where the shift from the central business districts is getting clearer. A lot of investors are turning to the suburbs instead. Let’s take a city like Melbourne for example. Since the pandemic, spending in the area surrounding the central business district has gone down by nearly 30%. At the same time, regardless of the lockdown orders, the suburbs are still seeing an increase.
“Spending data shows that COVID has been a disaster for the CBDs but led to a renaissance in the suburbs, where cafes and shops are filling up with workers working from home.” – Andrew Charlton, Economist
With that in mind, let’s look at some of the top investment hotspots around the country.
Adelaide has been one of the most stable areas throughout the pandemic. Looking at both houses and units in Adelaide, both experienced growth over this period. Throughout 2020, unit prices had a 13.5% increase and house prices had a 6% increase. Plus, we’re not seeing a pause any time soon. In the year from September 2020 to September 2021, Adelaide’s median house price increased by 17.9%.
One of the top suburbs in Adelaide you’ll want to look at is Largs Bay. It has one of the lowest house prices and the highest average rental yield of 3.8%. You can also look at suburbs like Blackwood, Tennyson, Semaphore, and prospect, for rental yields above 3%.
Sydney is definitely on the higher end of the market. The lockdowns did affect Sydney earlier on. We saw that rental prices had started to drop somewhat. However, around June this year, rent prices started to rise again. Between April and June, Sydney experienced a 1.8% rent increase.
Some of the top suburbs in Sydney that you can look at include Narrabeen and Collaroy and Bardwell Park. Narrabeen and Collaroy are both looking at compound growth rates of over 5% for houses over a 5-year period. Then when you look at Bardwell Park, you’re looking at an average rental yield of 2.4%. While the median house prices in Sydney’s suburbs will drive you upwards of $1.5 million, you can look at an area like Bexley for lower prices. Bexley’s median house price is roughly $1.2 million while units land at roughly $650,000 to $700,000.
Queensland is one area that has been focusing on building out its infrastructure. As a result, a lot of investors are attracted to this region. While people aren’t flocking CBDs, a lot of people are looking at suburbs in places like Brisbane to move to or to buy their first home. The pandemic resulted in an increase of nearly 16% in Brisbane’s house prices.
When you look into this, this massive growth can be linked to the interstate departure as people flee from the big cities. In fact, nearly 50% of Brisbane’s new citizens by the end of 2020, were people migrating from business hubs like Sydney and Melbourne.
If you’re looking for the most affordable price, then you’d want to look at Perth. The median house price in Perth is just around $500,000. In the past year, home prices increased by 18.1%, and unit value increased by 15%. Perth’s property market will continue to grow, as there are a number of large development projects underway throughout WA.
Some of the best areas in Peth you can look at are Yanchep, Clarson, and Forrestfield. Each of these areas has an average rental yield of over 4%. Plus, Yanchep and Forrestfield both have yearly growth rates of at least 6%.
By the looks of things, you want to avoid the CBD areas, at least for now. Work-from-home orders are still in effect and people are largely moving away from cities. Plus, looking at the different development projects underway, it’s a matter of which suburb is best for you.
For further guidance speak with one of our consultants at MLS Finance and if you are ready to make a move on your next purchase, fill out this short questionnaire.
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