Investors, the spotlight is on Adelaide.
New realestate.com.au data has revealed the 2019 hotspots for property investors, with the inner-west Sydney suburb of North Strathfield the front runner, closely followed by Glenside, south-east of Adelaide, and the South Australian mining town of Whyalla Norrie.
REA chief economist Nerida Conisbee says while the top 10 best performing rental suburbs cover a wide cross-section of Australia, including inner city suburbs, mining areas and small country towns, Adelaide is the place to watch.
“Adelaide is doing well in terms of rental demand. There does seem to be some jobs growth there and we are seeing some really strong rental demand,” Conisbee says.
“A lot of investors have left Melbourne and Sydney and are looking at Adelaide, which has been putting pressure on prices, particularly in places like Glenelg.”
In the past year, North Strathfield sustained 63% growth to bring the median sale price to $1.4 million and a 3.34% increase in rental yields, while Glenside experienced a 57% increase in the median sale price to $689,950 and improvements in rental yields of 4.71%.
“There is a recovery in many mining towns in Australia at the moment,” Conisbee says. “Rental growth took off about 18 months ago as mining projects started and now they’re starting to see some good price growth, mainly because investors have gone back in there.
“Those markets have turned around and they haven’t turned around for five or six years so it’s quite impressive.”
But she is cautious of investing in mining towns.
“You need to be really careful investing in mining towns because they are very project dependent and they can grow like crazy when the projects get up and running and employment grows.”
Furthermore, Conisbee says investors are unlikely to see sustained growth in these suburbs again and recommended focusing on neighbouring suburbs that may offer similar prospects.
“Once they get into the operational phase, if they don’t need all those people then it can leave you with a property that suddenly loses a lot of value and is difficult to tenant.
“Unless you are a very sophisticated investor, I think mining towns are probably the ones to stay away from.”
The focus, she says, should be on Rad-elaide.
“The Adelaide story is pretty positive. Adelaide is seeing very, very high rental demand at the moment. Prices haven’t become as unaffordable as other cities. There was never that boom time pricing growth that leads to a lot of problems, so Adelaide is definitely worth a look.”
“What I would be looking at is the themes that are happening here,” she says.
“So, North Strathfield is starting to move so perhaps look at the suburbs surrounding North Strathfield because often there is a bit of a ripple effect.”
1. North Strathfield, NSW
North Strathfield, in Sydney’s inner-west, has been the front runner for property growth in Australia in the past year and has shown strong rental yields, edging up by 3.34%.
On average, houses have returned $650 a week in rent, while units have netted $540 a week.
2. Glenside, SA
Just 5km from the Adelaide CBD, Glenside has sustained a 4.71% increase in rental yields, as well as 57% growth in the median sales price in the past year.
Houses generally rent for $470 a week, while units attract about $310 a week.
3. Whyalla Norrie, SA
A suburb of the iron ore mining and steelworks town of Whyalla on South Australia’s Eyre Peninsula, Whyalla Norrie has experienced considerable rental growth with a rental yield increase of 7.44% in the past year.
Similarly, sales prices have improved by 49% in that time.
4. Blackwater, QLD
The significant coal mining town west of Rockhampton has attracted 43% growth in the past year and a staggering 7.91% increase in rental yields, making it a good prospect for investors attune with property ventures in mining regions.
5. Fairfield, QLD
Just 5km south of the Brisbane CBD, Fairfield presents a solid inner-city investment opportunity, with 42% growth in the median sales price in the past year and 4.63% in rental yields.
Houses generally rent for $500 a week, while units are leased for $390 a week.
6. Greenwich, NSW
Capturing stunning views of Sydney Harbour and impressive neighbourhood ambience with cafes and restaurants and a harbour swimming pool, Greenwich is a lifestyle prospect.
Located just 7km north-west of the CBD, it has seen considerable growth (41%) in its median sales price in the past year. Similarly, rental yields have improved by 3.72%, with houses renting for around $940 a week and units for $550 a week.
7. Waikerie, SA
The small rural town in South Australia’s Riverland is a surprise addition to Australia’s list of best performing suburbs.
With median sales price growth of 37% in the past year, rentals have also kept pace with a 7.01% boost to yields.
8. Dysart, QLD
Dysart, north-west of Rockhampton has been crowned the best performing suburb in Australia for rental yields in the past year.
The town is a service centre for several local coal mines and the district’s grazing properties and has experienced strong property growth of 34% and a remarkable 9.74% increase in rental yields in the past 12 months.
9. Fullarton, SA
East of Adelaide on the outskirts of the CBD, Fullarton has been earmarked as another hot contender for investors.
The suburb sustained a 34% increase in its median sale price in the past year, as well as 4.71% growth in rental yields. Houses generally rent for $510 a week, while units garner $340 a week.
10. Glenelg East, SA
Inland from the iconic beachside suburb of Glenelg, Glenelg East has shown promise for investors in Adelaide. Just 9km south-west of the CBD, the suburb is a mash-up of quarter-acre blocks, contemporary homes, low-rise units, heritage properties and parklands.
The median sales price has surged 31% in the past year, along with impressive rental growth of 4.71%. Houses in Gleneg East generally rent for around $438 a week, while units net $300 a week.
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Source - ING | 10 September 2019