It’s finally here – Australia’s number one destination for property investment, as revealed in Your Investment Property’s Annual Suburbs Guide. Taking the four preceding spots, fifth to second, are a mix of Perth inner suburbs and Queensland areas affected by the resources boom.
We continue our countdown of the top suburbs on the list at number five.
To see other placings in the top 20, click the links below:
5. PERTH CBD, WA
- Distance from Perth: 1km
- Population: 6,342
- Median Price: $485,300
- Capital growth (12 months): 2%
- Rental yield: 5.89%
- Market type: Units
Get all the stats on our Suburb Profile
Perth is showing all signs of the long-awaited revival with many experts predicting the capital city to outperform all the others in the near to medium term. It has rounded out a dominant Western Australian performance at the top of the list, coming in at number five.
The key trigger to all this enthusiasm is of course the resources boom. With more companies opting to base their offices in the capital, demand is yet to peak. When combined with the current low housing supply and limited new stock coming on line, prices are set to rise dramatically.
Buyers snapped up 471 units in the 12 months to April, showing that demand is already starting to put pressure on prices, which lifted by 2% over the period. However, this is still a long way off from the suburb’s long term average annual growth of 8.6% over the past 10 years.
Another indicator of impending growth is sluggish performance during the past five years, growing a measly 2% each year. Rising rental yield is also a sign that things are on the way up.
“The Perth market is either at, or close to the bottom of its cycle and primed for growth in the near future,” says Tim Lawless, head of research at RP Data. “Overall, Perth values have fallen by 7.4% since they peaked in 2010. Despite the fall, the rate of decline has recently eased across Perth, there have been some subtle improvements in transaction numbers and the total number of homes available for sale is now lower than at the same time last year, suggesting vendors are regaining some leverage.”
Local Ray White principal Andrew Huggins says investors are most interested in one or two bedroom units under $500,000, due to high rental yields.
“An optimal price for a two bed unit is around the $400,000 or $450,000 mark,” Huggins says. “Unfurnished, you’re going to get a rent of between $500 and $600. Furnished, you might get over $700.”
Huggins says city yields are good because of rental demand from mining professionals with sizable incomes. “The mining sector is the biggest driver of rents in Perth, particularly with inner and near city apartments and property close to the CBD or on the way to the airport,” he says.
4. COMO, WA
- Distance from Perth CBD: 6km
- Population: 12,400
- Median Price: $450,200
- 12-month growth: -4%
- Rental yield: 4.37%
- Market type: Units
Get all the stats on our Suburb Profile
The first thing most investors will think when Perth inner suburb Como is mentioned is that it is too expensive. And with a median house price at around $800,000, they can be forgiven for feeling this way.
What makes the suburb a strong investment prospect, nonetheless, and one of the top ranked Perth suburbs, is its wide range of stock at different value levels. With median unit prices around the $450,000 mark, it’s possible to score deals as low as $300,000 – and for that price you want to get into Como.
“It’s seen as one of the best places to live in Perth,” says Property Wizards buyer’s agent Liz Sterzel. “It’s on the beautiful South Perth foreshore, rich with cafes and older houses on big blocks. It’s an affluent area and it attracts young professionals because the CBD is just across the bridge.”
Travelling on the Kwinana Freeway, it’s possible to access the CBD in less than 20 minutes, yet despite this, the suburb maintains a quiet feel. Noise is minimal and the suburb is über leafy and green for an area just a couple of kilometres from the CBD.
“The area has great infrastructure,” says Brendon Ptolomey, managing director of Herron Todd White-Perth. “It’s got everything from fundamentals like schools, shopping precincts, Curtin University and public transport in the form of ferries, buses and trains, through to the funky stuff like great restaurants, good coffee, great city skyline views, a golf course and the ‘in’ places to be seen.”
Ptolomey adds that Como’s future looks assured. “All [these fundamentals] add up to confidence in rental returns and confidence in future capital growth.”
3. GLADSTONE, QLD
- Distance from Brisbane: 550km
- Population: 60,300
- Median Price: Units $470,000, houses $510,000
- 12-month growth: 9%
- Rental yield: 5.07%
- Market type: Units or houses
Get all the stats on our Suburb Profile
Gladstone property has been getting a lot of press lately, in the wake of the huge investment that is going into the area because of the resources boom. It’s hence no surprise that Gladstone makes it into the third spot on our Top 100.
Current proposed resource sector projects are forecast to create just under an estimated 40,000 construction jobs and a further 8,000 operational jobs. This will obviously have a major effect on the city. Some estimate that such a surge of workers will trigger population growth of 30% in the next five years.
The sheer magnitude of mining projects is undeniable. Some $100bn in proposed and ongoing projects is estimated to be going into the area, dominated by projects such as Queensland Curtis LNG – a $15bn LNG production facility that will process coal seam gas on Curtis Island.
But local agent Steven James of LJ Hooker-Gladstone warns that the city is more than just a mining town. Gladstone boasts the world’s largest aluminium smelter, alumina refinery and one of Australia’s largest cement operations. It is also an all-round decent place to live.
“We get great weather up here and the city is on the coast, so a lot of people find it appealing,” he says. “There is a misconception of the area as just a mining town, but the industries here are diverse, and many investors see it as one of the best long-time investment destinations.”
2. MORLEY, WA
- Distance from Perth: 9km
- Population: 18,564
- Median Price: $470,000 (Houses), $330,000 (Units)
- Capital growth (12 months): -1%
- Rental yield: 4.26%
- Market type: Houses and Units
Get all the stats on our Suburb Profile
Western Australia’s highest ranking suburb, coming in at number two, is Morley, a large suburb located 9km north of Perth’s CBD. Morley has long attracted homebuyers into the area thanks to its excellent amenities, affordability and proximity to the city centre. Now, investors are poised to benefit from the consistently high demand and low available stock on the market, which is a perfect recipe for sold price growth.
During the past 12 months ending March, the median house price fell 1% – well below the long term average growth of 11.4% over the past 10 years. The suburb hasn’t seen strong price growth for five years now, which suggests a surge is on its way.
Tim Lawless from RP Data believes that like most of Perth, Morley is at or close to the bottom of the property cycle and poised to bounce back with some growth. “The rate of decline has recently eased across Perth, there have been some subtle improvements in transaction numbers and the total number of homes available for sale is now lower than last year, suggesting vendors are regaining some leverage,” Lawless says.
Local agent Trevor Newman, from Newman Realty, says old houses on large blocks are popular in Morley, as they give buyers the chance to make renovations and add value. “If the house is a nice home and you can keep it in place and develop at the back, you’re looking at about $500,000,” he says. “These might rent for around $450 a week.”
1. SOUTH BRISBANE, QLD
- Distance from Brisbane CBD: 2km
- Population: 4,300
- Median Price: $475,000 (units)
- 12-month growth: -1%
- Rental yield: 7.08%
- Market type: Units
Get all the stats on our Suburb Profile
South Brisbane raced to the top position of this year’s Top 100 ranking – a potent combination of high demand and low supply as well as solid fundamentals helped it outshine the other strong contenders. This distinct shortage of supply, contrasted by raging demand has forced rents and median price to trade at a premium according to an Urbis report.
“Without doubt, the rents in South Brisbane are the best for a blue chip suburb located anywhere in Australia,” says Sam Saggers, CEO of Positive Real Estate.
Located just 2km from the centre of the city, South Brisbane is the site of SouthBank, which is home to a raft of cultural spots including the Gallery of Modern Art, the State Library and the Queensland Art Gallery.
“It’s a mecca for students, executives, and the city’s elite,” says Saggers.
“The suburb is a cultural hub of Brisbane. It has some of the best award winning restaurants, museums and art galleries, access to train lines and amenities aplenty, along with over 30,000 sqm of commercial office space and some of the largest, big-name commercial tenants in the country. The residential market is tight.”
Demand for apartments and units has been fuelled by the rapidly growing numbers of younger professionals moving close to their workplace.
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