With working from home now part of our “new normal”, we’ve started to see specific repercussions for inner-city rental prices.
New research shows rents in inner-city suburbs of east coast cities are in decline as tenants seek bigger homes and more space in suburbia and on the urban edge.
For investors confident in the value of suburban property, this is a rare opportunity to pick up assets at good prices with a stable rental income that could rise over the next 12 months.
Industry researcher CoreLogic has found 63 suburban regions across Sydney, Melbourne and Brisbane where rents for houses have increased. Rental hikes for apartments have been picked up in 35 of those regions.
CoreLogic found that the closer rental properties were to city centres, the more significant their income decline.
Rents for houses within 10km of a CBD dropped 2.3%, while rental apartments suffered a 3.5% decline. At the other end of the spectrum, in the Blue Mountains on the edge of Sydney, house rents went up 3.3%.
This means it is more important than ever to calculate your investment yield based on the lowest likely rent regardless of where you choose to invest. However, once you have done this, if the numbers stack up, you are looking at an even greater upside when rents rise again.
Below is a quick list of tips for a successful property investment.
- Take a long-term view of how a property might help you meet your financial goals. Remember to include all expenses, including strata fees (if applicable), council fees, insurance, regular maintenance and property management expenses in your calculations.
- Research the next hot area according to your own investment criteria. Don’t follow the pack. By the time a suburb is labelled ‘hot’ by the media, the factors that made it so have usually changed.
- When researching, look at median prices, the range of prices, the type of property that is most popular to rent and rental trends. Also find out how popular the area is to rent.
- Use your head, not your heart. Don’t let emotion dominate your thinking. Know the value of the property you are looking to purchase and how it stacks up as an investment. Don’t pay over the odds.
- Have your finance ready so you can act when you find the right property.
- Don’t set and forget. Property portfolios need to be reassessed periodically, just like exposure to financial markets.
- Understand your fiscal risks and work with a professional financial adviser to mitigate them.