Where are the top 20 hotspots for property investors?
The top 20 locations in Australia for property investors with a $100,000 deposit have been revealed, with seven suburbs in Newcastle included in the list.
Online research company Suburb Help has identified 20 locations in its $100k Investment Report. It includes nine suburbs in NSW, six in the ACT, two in South Australia, two in Victoria and one in Tasmania with a mix of both metro and regional locations.
To make sure locations were suitable for investors, suburbs were excluded if they had a:
- Median price above $1m
- Owner-occupier share of 65% or more than 90%
- Renter share less than 10% or more than 35%
- Vacancy rate more than 1.5%
- Yield less than 3%
- Median weekly rent that has increased by less than 5% over the previous 12 months
This process excluded the vast majority of suburbs in Australian, leaving just a small number of investor-grade suburbs. Suburb Help then whittled the suburbs down to a top 20 and ranked them based on median price (from lowest to highest).
“The cheapest median price is just $590,000, potentially making that suburb accessible for an investor with a deposit of $59,000,” said Suburb Help chief property strategist Veronica Morgan (pictured above left).
Morgan said it was not easy to buy a property right now for a couple of reasons.
“First, even though prices are declining in many parts of Australia, they’re still elevated following the recent boom,” she said. “Second, investors’ borrowing power is declining with every Reserve Bank rate hike, so it’s good to know that if you find a lender prepared to accept a 10% deposit, you can still buy into a good investment location for a relatively modest price, provided you do your research.”
Morgan said every location in the Suburb Help $100k Investment Report had been carefully selected.
“We wanted locations that were not only likely to record above-average capital growth over the long-term but would also provide a healthy cash return right now,” she said. “That’s why we limited ourselves to locations that had low vacancy rates and reasonable yields. As a result, if you buy a quality property in one of these locations, you should find it relatively easy to secure a reliable tenant prepared to pay a good rent.”
Brenden Lowbridge (pictured above right), director of Newcastle brokerage Money Links, said investors could enjoy the benefit of investing in a growing area close to Sydney.
“We have an affordable price point when compared to Sydney along with excellent lifestyle benefits, increasing rents and very tight rental vacancy which has provided the perfect storm for Newcastle and Lake Macquarie,” Lowbridge said. “Investors have also seen that capital growth in many cases over this last growth period has kept up with Sydney suburbs.”
Lowbridge said he had noticed an increase in investor clients wanting to purchase in Newcastle.
“I have noticed there are more experienced investors using the current negative market sentiment to their advantage,” he said. “We just assisted an investor purchase a unit in the beachside suburb Merewether for $650,000. There are many comparable sales from six months ago that are in the $720,000 range.”
Lowbridge said he forecasted this trend to continue.
“I believe when interest rates level out later this year, confidence will return and a larger wave of buyers will come into the market,” he said. “I also believe that a big reduction in construction starts due to build cost increases will put more pressure on existing rentals, meaning an increase in rental yields. Investors will be attracted to these improved yields and push into the market.
“Whilst people have transitioned to Newcastle from Sydney, due to limited employment opportunities I believe that this has been slow to begin with. As large national employers start to consider these areas as an option and employment opportunities present themselves, migration will really kick in which will push up local rents and prices.”
The Top 20 suburbs for property investors: