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Across Sydney’s Northern Beaches, David Gilmour, principal of Raine & Horne Collaroy, says investors are snapping up older style two-bedroom apartments, which are available for sale between $480,000 and $540,000.
“These types of properties rent for up to $460 a week,” says Mr Gilmour. “Add annual average capital growth of 8-10% and gross rental yields of 4%+ and it is very difficult to beat Manly Warringah investment properties.
Closer to the CBD, and John Simpson-Morgan, principal Raine & Horne St. Leonards, points to rising investor interest in his area as evidence of a stronger investment market. “Rents are increasing, so investors are returning to the local market after being absent for many years,” says Mr Simpson-Morgan. “In fact, rents have increased 20% over the last two to three years.”
For entry level investors, Mr Simpson-Morgan reports that one-bedroom apartments are available for as little as $400,000, while a two-bedroom, two-bathroom apartment can be secured for an average price of $700,000.
In Concord, investors tend to seek out older 1970s style apartments for stable returns, according to principal Raine & Horne Concord, Paul Pettenon. “Investors are finding it a nice change to lease out older style two-bedroom apartments with a car space or carport, which have cheaper strata fees and fewer outgoings,” says Mr Pettenon. “These properties are generating rental returns of $350-400 a week.”
Further west, and savvy investors have recognised that lower prices mean now is a good opportunity to buy. “While prices are down, rents have increased which is producing generous yields compared with other asset classes,” says Gary Rossetto, Principal Raine & Horne Penrith.
For example, we recently sold a nine year old, three-bedroom townhouse in St Marys for $300,000,” said Mr Rossetto. “We expect this property will rent for $400 a week and produce a $5,000 per annum depreciation deduction.”
Investors are also making moves on the NSW south coast, according to Jared Cochrane, sales consultant at Raine & Horne Nowra. Cochrane reports that investors from Sydney, Wollongong and Canberra are purchasing the majority of cheaper properties in Nowra, at prices under $300,000.
“$250,000 will get you a three-bedroom brick home, which will rent for around $280 and provide returns of over 5%,” said Cochrane. “Our prices have always been reasonable compared to the popular coastal areas in the Shoalhaven area,” he added.
In the ACT and surrounds, the rental market is also strong, with rents increasing between 7 and 10% over the last 12 months, according to Michael Mallon, principal Raine & Horne Queanbeyan. “We are seeing more investors in the market than in the last 18 months to two years,” said Mr Mallon.
“Prices are staying fairly stable, which is great for entry point investors. We also have more properties coming up for sale, which should increase activity in the coming months.”
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