Do you want to know where house prices are expected to double in 10 years? Or where rental yields are highest? How to choose the best growth suburbs, or find ones with the best returns, are questions many investors ask.
Leading residential property researcher RP Data has identified 263 suburbs where current trends suggest the median value will double over the 10 years to February 2018 and 792 suburbs where rents are on track to double over the same period. It has found 582 suburbs that are currently showing a gross rental yield higher than 5.5%. Impressive considering sub-5% home loans are now available.
Victoria (68) and NSW (65) have the largest number of suburbs where values are on track to double in 10 years, say the authors of RP Data’s Autumn Investor Guide, Tim Lawless and Cameron Kusher.
Strong rental growth areas are most predominant in NSW with 249 Sydney suburbs and 113 regional areas meeting the criteria. Queensland has the most suburbs (224) with gross regional yields of at least 5.5% – 148 in regional areas.
The free report is at www.myrp.com.au/investorsguide and examines every suburb across the country over the past five years. It’s important to keep in mind that housing conditions have been much weaker over the past five years, Lawless says. “The suburbs highlighted in this report have achieved a strong performance despite the overall weaker conditions.”
Overall investors have done well in the housing market over a long period of time, says Lawless. But “they now need to be more discerning than they have in the past, because value appreciation isn’t likely to be as strong over the next 10 years compared with the past 10.”
The report is a good starting point for investors, providing a list of areas to investigate further, Lawless says. But you need to do your homework. For example houses in Berrimah, a predominantly industrial suburb of Darwin, ranked top for growth, 25.7% a year for five years. But scratch beneath the surface and you find there were only 12 house sales in the suburb in the year to March 31, according to domain.com.au, a very small number.
The Walk Score website measures the number of typical destinations within walking distance of a dwelling or suburb, with scores ranging from 0 (car-dependent) to 100 (most walkable). “Recent overseas studies indicate that properties with above-average levels of walkability command a premium,” says leading property researcher Michael Matusik in a recent Matusik Missive. “In the US, for example, an additional one point increase in a walk score is associated with a potential $3000 increase in property values.” Matusik’s recent study of 24 Brisbane suburbs found places with higher scores achieved higher prices, grew faster, attracted higher rents and rental returns, and had fewer vacancies and fewer properties for sale. Check your suburb at www.walkscore.com.
Story: Pam Walkley Source: http://finance.ninemsn.com.au