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Where to buy an investment property that’s not in Sydney or Melbourne

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Property prices in Melbourne and Sydney have skyrocketed in recent years and for many new home buyers the home owning dream now seems out of reach.

Sydney’s median house price is $1,032,338 and Melbourne’s is $818,237 according to Domain’s June 2019 House Price Report. The unit prices aren’t much better either.

However, property investment remains a relatively stable and low risk way of growing wealth as many new home buyers now look to invest in more affordable areas in Australia.

So, where should you look to buy an investment property? We've put together a list of affordable towns in Australia.

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Newcastle, NSW

newcastle-scenery

Newcastle is a promising city located less than 3 hours (driving) away from Sydney, making it a great alternative. The city is slowly gentrifying and blossoming from a heavily industrial port city, into a trendy coastal destination.

With many great schools, parks and beaches, Newcastle is a good option for families wanting a more affordable lifestyle. Property investors should consider purchasing a family-friendly property to take advantage of this.

However, with a prominent university, Newcastle is also home to many young people who will be looking for apartments, which can pose as a good investment opportunity given the hefty rental yields of student accommodation.

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Mount Barker, SA

mount-barker

Located just 33 kilometres from the city centre of Adelaide, Mount Barker is one of South Australia’s fastest growing areas.

It has a median house price of around $365,000 and the potential for a yield of 5.41%, making it a town to consider for investors. It’s proximity to Adelaide and strong public transport links also make it great for families looking to get a little more for their money, but still be able to commute into the centre of Adelaide for work.

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Wollongong, NSW

wollongong-property

Like Newcastle, Wollongong is a great mid-sized city to consider for an investment property. Located just 1 hour and 30 minutes from the Sydney CBD, Wollongong offers stunning beaches, quality education and a vibrant community to immerse yourself in.

Home to the University of Wollongong, investors might like to again consider the student rental yield potential. Given that many of the university’s students come from outside the city, they’ll need a place to live.

Its relaxed, slow-paced lifestyle has attracted a growing number of families ditching bigger cities for a more affordable lifestyle. The median house price is $770,500 and you can snap up a one-bedroom unit for around $380,000.

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Geelong, VIC

geelong-coastline-early-morning

Geelong is another smaller city that proves that you don’t have to sacrifice city-life when purchasing an investment property. As it’s just over an hour from Melbourne’s CBD, it’s a popular choice for commuters.

The median house price sits at around $782,500 and units at around $555,000, making it more affordable than its neighbour. Improving infrastructure and job opportunities means that the population is forecast to grow by over 100,000 by 2036.

Ballarat, VIC

ballarat-property

Ballarat is a historic gold-rush city located 1 hour and 30 minutes from Melbourne. Not only is Ballarat a beautiful blend of history, sights, nature and culture, but it is also very affordable. As it’s popular with families, look into investing in family-friendly properties.

The city is a high-demand market averaging 1,147 visits per property listing compared to Victoria’s overall 812 visits per property. With median house prices currently at $470,000 and a multitude of infrastructure projects set to boost the population, it’s a small city worth considering.

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The Blue Mountains, NSW

blue-mountains

The Blue Mountains is a vast region just west of Sydney that features scenic views and cute little towns. With an array of attractions, the Blue Mountains is a popular area for tourists, families and older people.

Popular and charming towns like Leura, Blackheath and Mt Wilson in the upper Blue Mountains, as well as Springwood, Hazelbrook and Faulconbridge in the lower Blue Mountains are areas to consider.

Depending on your intended rental target group, it may be worth investing in the lower Blue Mountains. Springwood, for example, is a comfortable 1 hour commute to Sydney’s CBD and has a median house price of $680,000.

Towns further up the mountains, such as Leura, are generally more scenic and popular with tourists. An investment property in these areas could potentially serve as a holiday-rental.

Canberra, ACT

property-in-canberra

If you’d still like to stick to the city, you still have options. Canberra, Australia’s capital and third most expensive city, has experienced growth in recent years― particularly for houses.

Canberra’s median house price is $742,000 and the median unit price is $448,700. Canberra is obviously still an expensive city, but is significantly cheaper than Sydney or Melbourne and it’s property market is generally much more consistent.

The ACT has experienced an 11.2% population growth between 2011 and 2016. Much of this growth was within Canberra specifically.

Canberra presents a lot of advantages to a keen property investor. It has a strong job market and is home to many young professionals in need of a place to rent. So, it can be smart to consider units for that reason. However, the nature of Canberra as Australia’s political centre means that politicians and business people may find themselves relocating for impermanent periods of time (e.g. 6 months to 2 years). Often they’ll bring their families with them and will be looking to rent a house.

Rental yields here are among the best in Australia, at a rate of about 6.14% for units.

Check out the following suburbs that have had good Year-over-Year (YoY) growth:

  • Ainslie
  • Greenway
  • Watson
  • Chisholm

Brisbane, QLD

property-in-brisbane

Brisbane is a popular choice for relocation as it offers the best of city life with the balance of a relaxed country-style lifestyle.

Property prices may be falling slightly, but Brisbane is one of Australia’s fastest growing cities with a population of over 2.4 million. There’s a reason why thousands of Sydneysiders are moving to Brisbane.

But one of the main reasons to consider Brisbane for an investment property are the rental yields. Rental yields for units were at 5.23% in Brisbane in March 2019, compared to 4.58% in Melbourne.

Look to invest in the outer suburbs of Brisbane for the best potential for growth.

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Noosa, QLD

houses-in-noosa

Also in Queensland, the Shire of Noosa experienced significant growth in 2018. Units rose by over 10% to a median price of $540,000 and houses also rose impressively by 6.9% to a median of $695,000.

Popular amongst tourists, investing in property in Noosa could present many options. You could consider using the property as a holiday rental, which could potentially be even more profitable than renting out normally.

And not only is Noosa filled with beautiful natural scenery and beaches, but is only 30 minutes away from the Sunshine Coast Airport and 2 hours from Brisbane.

Bunbury, WA

property-in-bunbury

Bunbury is a beautiful coastal city in Western Australia, two hours south of Perth. With a median house price of $486,250 and a rental yield of up to 4.61% for a unit, Bunbury is certainly a regional city to consider.

The key industries that employ a lot of the local population are mining and mineral processing. The city is also going on significant developments that are likely to lead to growth in population and employment.

These are just a few areas to consider for your next investment property. Consider the rental demand, population growth, median property prices and employment options when evaluating the soundness of investing in such areas..

If you’re considering investing in property and still have questions, have a chat with one of Lendi’s Home Loan Specialists.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: new purchase, selling property, property prices, investment property, new purchase, first home buyer

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