Strong investment yields attract savvy Sydney investors to regional and coastal hotspots

Media release - 19 April, 2012

Investors looking outside Sydney for value

  • Regional and coastal NSW could be the answer for savvy real estate investors looking for value
  • Wollongong rental vacancy rates sitting below 1%, as overseas students flock to the University of Wollongong
  • Vacancy rates in Port Stephens/Nelson Bay sit at 1.15% - which is very low for the region.
  • Buying multiple dwellings such as smaller apartment blocks in regional and coastal centres not only provides value, but investment yields in excess of 6%

With Sydney’s real estate prices continuing to head north, more investors are considering regional and coastal markets to achieve their financial objectives.

“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 Angus Raine, CEO Raine & Horne.

“As a consequence, towns such as Tamworth, Bathurst, Newcastle, Albury/Wodonga, Wollongong and Nelson Bay are squarely in the sights of investors where healthy yields in excess of 6% and some capital growth are possible.”

Indeed the latest data from Residex shows that median house prices in regional NSW grew by an annual average of 6.17% over the ten years to February, 2012 – while the median prices of regional apartments increased by an annual average of 6.26%.

“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.”

In Wollongong, Josh Kersten, Co-Principal of Raine & Horne Wollongong, reports that some Sydney investors are buying multiple units and even entire apartment blocks in NSW’s third largest city.

“We recently sold four apartments in the same block at 19 Railway Crescent, North Wollongong to a Sydney-based property syndicate for $830,000,” says Mr Kersten.

“Each property is currently leased for between $275 and $280 a week, generating a gross rental return of more than 7% each for the syndicate.”

Another investor, according to Mr Kersten, also recently purchased a block of four, 2-bedroom apartments in Lake Heights on Wollongong’s outskirts.

“The investor paid $630,000 for the block with a combined rental of $880 a week, which is a fantastic return of around 7.3% gross,” said Mr Kersten.

“Wollongong’s vacancy rates are currently sitting below 1%, which has fuelled an attractive environment for strong rental returns, which in turn, entices investors,” says Mr Kersten.

The University of Wollongong, which is ranked in Australia’s ten best universities and is in the top 2% of universities globally, has attracted cashed up international and interstate students to the city, nearly all of them renters, who are willing to pay top dollar just to secure accommodation.”

Likewise, the attraction of high rental yields and low vacancy rates of 1.15% have also sparked investor interest in one of NSW’s favourite holiday destinations – Nelson Bay.

“Investors traditionally represent about 25-30% of our total sales,” said Ray Noonan, Principal of Raine & Horne Port Stephens/Nelson Bay.

“Confidence is gradually returning on the back of improving rental yields, which are tracking around the 5% mark, however higher yields are also certainly achievable in our region.

“As a result of the best rental yields in many years, there has been an upsurge in investor enquiry.”

“Moreover, some of the best rental yields are usually associated with residences where there are multiple dwellings on the one property,” said Mr Noonan, who cites the example of 32 and 32a Morna Point Road, Anna Bay, which is currently on the market for $430,000.

“These are two free standing homes built on one title, that are generating a combined rental income of $530 a week, which is a gross yield in excess of 6.4%.”

-ENDS-

For further media information contact:

Angus Raine, CEO Raine & Horne on (02) 9258 5422 or 0409 920 697

Josh Kersten, Principal Raine & Horne Wollongong on (02) 4229 9600 or 0419 991 500

Ray Noonan, Principal Raine & Horne Port Stephens/Nelson Bay on (02) 4984 1008 or 0408 238 347

Andrew Harrington, National Marketing & Communications Co-ordinator on 02 9258 5400