New data suggests that Sydney investors should look further afield

SLOWER price growth coupled with rising rents have presented investors with new cash flow opportunities north of Sydney.

PROPERTY investors should buy in the outskirts of Sydney to get the best rental returns, new data suggests.


30/80 Dalnott Rd, Gorokan. Source:Supplied

 

The CoreLogic research showed 17 of the top 20 suburbs with the highest average rental yields in the Greater Sydney region were over 16km from the CBD. And almost half were in the Central Coast region.

Other top areas included southwest Sydney and the Blue Mountains.

 


The Central Coast is becoming an investment hotspot. Picture of Terrigal Beach:Peter Clark Source:News Corp Australia

The best rental returns were on offer in Central Coast holiday hot spots Killcare and Killcare Heights. Average rental returns in both suburbs were over 13 per cent.

Rental yield is calculated based on a suburb’s average annualised rent divided by the median sale price.

A return of 7 per cent or more usually suggests typical rents are higher than buyers’ mortgage repayments.

 


Killcare beach has some of the most exclusive holiday houses on the Central Coast. Source:Supplied

Houses in MacMasters Beach, another Central Coast favourite for holiday-makers, offered rental returns at 7.6 per cent — although, like in the Killcare region, many of the homes were offered for rent on a short-term basis. This suggested landlords had to continually find new, high paying tenants for their properties.

Units in Blue Mountains hub Katoomba offered the best returns in the west at 5.1 per cent, followed by units in Campbelltown at 4.9 per cent.

The average rental return for a Sydney unit is 3.9 per cent. Returns for houses average 3 per cent.

 


The Blue Mountains are another holiday hotspot appealing to investors. Picture: istock Source:Supplied

Realestate.com.au chief economist Nerida Conisbee said some suburbs offered high rental yields due to cheaper prices.

“Outside (inner) Sydney, prices haven’t changed as dramatically but rents continue to go up,” she said.

Cash flow was also becoming more important to investors due to recent market restrictions, including the Australian Prudential Reglation Authority’s crackdown on interest-only loans, Ms Conisbee added.

This made properties with higher rents relative to the purchase price more appealing as they required less in mortgage repayments.

Real estate experts said investors with limited budgets would get the highest cash flow from purchases in the Central Coast. Suburbs in the Wyong region, including Gorokan, Lake Haven, Wyong and Mannering Park all had median house prices below $550,000.

 


30/80 Dalnott Rd, Gorokan was recently sold by a Gorokan investor. Source:Supplied

Local Central Coast resident Karl Peter recently bought his second investment property in Gorokan’s neighbouring suburb, Canton Beach. He said his decision wasn’t purely based on high rental yield.

“I was looking at where larger investors were spending cash, close to the water and beaches and I read that the foreshore was getting a couple of million dollars in upgrade.

“I looked at potential growth of the suburb, rental return, growth of surrounding suburbs. It was a long process making the decision.”

 


Canton Beach, Central Coast. Picture: Chris Holland. Source:Supplied

JESS VERRENDER
Central Coast Gosford Express Real Estate April 20, 2018

 

Originally published as Central Coast an investor hotspot

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New data suggests that Sydney investors should look further afield