Last Modified: 01/02/16
Investment Property For The Cost Of A Cup Of Coffee?
How expensive is it to own your an investment property? According to John Faulkner from Home Port Property, it can be as little as just $4 a week. Round about the cost of a cup of coffee. To see how John explains that the average person can afford to do this, by looking at a real life example of an off the plan Brisbane development, just visit this page to view the free webinar replay and find out exactly how you can do this too. Now back to Melbourne vs Sydney…
The property prices in Melbourne are either impossibly high or dwindling and the answer depends on who you ask. Some suburbs are booming while others show stagnation from being oversupplied. High end suburbs like Kew and Brighton are booming while in the inner circle, there is a glut that is causing price stagnation. The good thing though is that the Victorian capital contains some good prospects which, unlike Sydney, have not reached the unaffordable level.
So long as you are ready to venture outside the typical inner circles of Melbourne, there are some well-priced but attractive prospects in Melbourne. Most of these suburbs have excellent transport connections as well as growing job prospects.
So what are the investment hotspots in Melbourne?
One affordable option found in the Bayside region is Frankston. This is a coastal suburb that has parks and gardens as well as several young families. Also, it has rail connections to Melbourne’s CBD and a good road connection in addition to Peninsula Link.
Property rates here are growing by roughly 7% annually, and the median house price stands at about $330,000 according to the figures coming from RP Data. The same figures show the median unit price to be $260,000.
Experts see Frankston as being on the verge of a big socio-economic transformation. It is a hub that is regionally significant between the Mornington Peninsula and Southern Metro area of Melbourne. The area has been estimated to have a population of over 470,000 by 2026. Employment opportunities in this area are also set to be improved by the local council.
The inviting northwest
Another area experiencing an unusual wave of popularity is Sunbury, located some 40 km northwest of the CBD. Many buyers see the place as offering cheaper housing despite being in an area that is well-linked to the city.
Observers see this area as one of the Melbourne’s principal growth corridors given that it offers cheaper housing that is sure to drive investors looking for sustainable growth and good yields.
Many investors usually find it impossible to resist the CBD because this is where most of the new buildings are, the best jobs are found and also the most vibrant dining and entertainment is to be found.
But the flip-side is that there is an oversupply of houses given that too many units are being developed in this area. This has really slowed price growth, which ultimately hurts rental yields. This should discourage many prospective investors.
According to Cameron Kusher, a senior research analyst at RP Data, the RBA was concerned by this and that is why they warned investors of risks involved with buying inner-city as well as outer fringe Melbourne markets earlier this year.
Kusher further notes that Melbourne has the smallest growth rental yields at 4.4% for units and 3.6% for houses.
What are the top 5 property investment hot spots of Sydney?
There are many factors that come into play for a suburb to be made a growth area. These include improved roads, new infrastructure, and access to local amenities and public transport. Investors also consider why a community would want to live in a specific area, as this is what makes a suburb popular with renters. Based on these factors, let’s look at the hottest property markets in Sydney.
What makes Lakemba a terrific property investment destination is because of the cultural connection that people usually have with Lakemba Mosque. This means that the area is likely to always attract renters as well as offer a decent rental return.
• Surry Hills
This is absolutely a cracker area. Although many people are of the view that this area is falls in the flight path, the truth is that it’s not. In terms of price, the area is hugely undervalued given that it also has Eastern Distributor’s which makes it a lot easy accessing the area. There are lots of opportunities that you can renovate in this place.
Have some of the best priced terraces with some still requiring renovations. The place is also quite popular with the renters.
This area has terraces that are hugely undervalued since they are lumped in one category as units which happen to be in oversupply. What makes this area terrific is the cultural lifestyles that it offers and also its closeness with the Harbour which has made it one of the best Sydney hotspots.
Affordability or growth?
Although Melbourne might appear affordable in some areas, there has not been a lot of investor movement and this is with a reason.
Kusher says that both Sydney and Perth had a 5-year stretch which was characterized by flat-lining and this allowed for affordability in the two cities to improve. It is for this reason that in Sydney, for instance, low rates of interest have been catalytic lately for property investment.
Conversely, Melbourne did not have a long period for market correction, and although it has lots of affordable offerings, the current values stand at 4.4% lower as compared to their October 2010 peak.
The reason the Melbourne property market does not respond with similar level of dynamism as the Sydney and Perth markets is basically because of affordability, according to Kusher.
Melbourne market however is expected to continue to realize moderately rising values with mortgage rates being so low. However, there are risks of further value falls if mortgage rates start to rise and also if the unemployment rises as has been forecast.
In meantime though, a handful of Melbourne suburbs have enjoyed a dramatic growth, and these include East Melbourne, Eaglemont, Elwood, Malvern East and Warrandyte. In these suburbs, house values shot up by over 20% in the year ending July.
In suburbs like Eaglemont, values are obviously at the higher end but owing to the spaciousness as well as the beauty in majority of these homes, there seems to be an increasing appetite of living there.
As for units, Albion, Murrumbeena, and South Kingsville increased in value by over 23% in the run up to July. The suburbs are also well connected to public transport and are close to Melbourne City Centre.