Where to look for the bargins
Thanks to the development of the internet as a real estate research tool, it’s become a simple matter to research property sales across the country. Many investors are now looking much further afield than the next street or suburb.
In Katherine, NT, good quality three-bedroom houses can be found for about $174,000 or a two-bedroom unit for $120,000. Typical rents in the area are $250 and $210 a week respectively - a 9% return for houses and 7.5 % for units. Against the national trend, prices have risen 12% in the last 12 months and rents have come off to some extent but there are still bargains to be found.
The area between Brisbane and the Gold Coast is a magnet for people moving to Queensland from interstate. In Kingston, roughly midway between these centres, the median price for units fell 9% to $117,000 in the six months to November. Low vacancy rates have enabled rents to hold up fairly well.
The global resources boom has proved a godsend for Western Australian investors, with cashed-up workers at all levels flooding into the area. In Karratha, regional centre of the Pilbara, you can find a new three-bedroom house for about $350,000 and rent it out for up to $600 a week - a yield of 9%. Returns of over 10% have also been reported.
In Melbourne, a saner price environment means that investors can find good-quality inner city apartments at prices that permit a realistic rental proposition. About $350,000 will secure a two-bedroom unit with a car space, rentable for $380 - $400 a week – a yield of about 6%.
Sydney’s overvalued market is a tough one for investors, but the northern beaches offer some value, with units offering a yield of 5.8%. The high average price of almost $450,000 remains a barrier to many.
The city of churches continues to offer pockets of good value. In Adelaide's northern fringes, in popular suburbs like Elizabeth, three-bedroom maisonettes are selling for about $100,000 and renting for between $140 and $160 a week - a yield of more than 7 per cent.