This is a timely question, especially for those property investors seeking a mix of long term-growth and generous yields.
And better still, CoreLogic has recently produced a report[i] showing the Top 20 regions where investor enquiry has surged. At the top of the list is the Logan and Beaudesert region south of Brisbane, where investor activity is up over 350% year on year. The next best is Moreton Bay – south which is up almost 200%.
Southeast Queensland is currently a clear favourite for investors in 2021. Greater Brisbane (up almost 200%), Darwin (150%), and regional South Australia (110%) have all shown solid year-on-year increases.
Other regions on the investor hit list include Ipswich in Brisbane, North Toowoomba, Mackay on the Coral Sea Coast, Brisbane – South, the Barossa region in South Australia, Inner City Brisbane, Mid North Coast of NSW, Brisbane – East, Moreton Bay – North, the Murray region, Gold Coast, New England, Far West NSW and Orana plus Southeast Melbourne.
According to CoreLogic, relative affordability and tight rental markets appear to be grabbing investor interest in these areas. For example, Southeast Queensland and Brisbane properties remain relatively affordable compared to Sydney and Melbourne, and the investor hot spots also have yield advantages over NSW and Victoria.
To illustrate, in Logan Central, the median three-bedroom house price is $326,000, and the median rent for a similar property is $340 a week[ii]. This is a gross yield of almost 5.5%. In comparison, average yields in Sydney are 2.5% and 2.8% in Melbourne.
There’s no doubt that some investors have also recognised that banking regulator Australian Prudential Regulation Authority (APRA) has increased the minimum interest rate buffer it expects banks to use when assessing the serviceability of mortgage applications. APRA has told lenders it hopes they will assess new borrowers’ ability to meet their loan repayments at an interest rate at least 3.0 percentage points above the loan product rate. This rate compares to a buffer of 2.5 percentage points commonly used by lenders previously. At the same time, low interest rates and already established lending buffers should minimise the impact of the APRA announcement. That said, savvy buyers will always keep their fingers on the pulse before making an investment decision.
We have offices in many major regional towns across Australia. To find out more about buying an investment property in your region of interest, please contact your local Raine & Horne office today.