Investors looking for good yields should head towards regional and coastal areas for value, according to a leading real estate agency.
With soaring prices in Sydney, and tight vacancy rates in Wollongong, PInvestors should head towards certain regional and coastal areas for valueort Stephens and Nelson Bay, savvy property buyers have been seen flocking away from the CBD, said Raine & Horne CEO Angus Raine.
“With an average sale price nudging $600,000 across Sydney it is little wonder that investors are being lured by properties in regional NSW,” said Mr Raine.
The townships of Tamworth, Bathurst, Newcastle and Albury/Wodonga are also in the sights of investors, he said, with yields above six per cent and capital growth still possible.
“Smart investors are looking at regional centres that have increasing populations as a result of Australia’s growing education and tourism sectors, or towns that are enjoying the spinoffs from the mining boom,” said Mr Raine.
“These factors combine to impact the availability and affordability of housing in towns outside the metropolitan area.”
Wollongong, in particular, has seen a higher volume of investor activity particularly in the unit and apartment block market, said Raine & Horne Wollongong’s co-principal Josh Kersten.
“We recently sold four apartments in the same block at 19 Railway Crescent, North Wollongong to a Sydney-based property syndicate for $830,000,” said Mr Kersten.
“Each property is currently leased for between $275 and $280 a week, generating a gross rental return of more than seven per cent each for the syndicate.”
“Wollongong’s vacancy rates are currently sitting below 1 per cent, which has fuelled an attractive environment for strong rental returns, which in turn, entices investors.”
SQM Research, however, places Wollongong’s vacancy rate at 1.5 per cent.
Nelson Bay has also seen a large proportion of investment activity, with 25 to 30 per cent representing investor purchases.
Ray Noonan, Principal of Raine & Horne Port Stephens/Nelson Bay said that confidence is returning due to rental yields creeping up from the 5 per cent mark.
“As a result of the best rental yields in many years, there has been an upsurge in investor enquiry,” Mr Noonan said.
He also indicated that blocks with multiple dwellings were the best for rental returns.