The four-year trend of house values outstripping those of units has continued according to the latest study from industry researcher CoreLogic.
The gap between house and unit median prices is now 45.2%, the equivalent of $239,950.
When the pandemic arrived in March 2020, the difference was 16.7%.
City house values have increased 33.9% ($239,000) since we locked down. By comparison, unit values are 11.2% ($65,235) higher.
Isolating the past 12 months, houses are up 11.0% ($93,552) and units 6.9% ($41,789).
CoreLogic says the acceleration in house prices stems from a desire for greater space and a willingness to move further from city centres.
With the current significant demand for rental houses across Australia, investors will now also need to factor in their potential capital gains increases in comparison with apartments, which have been a traditional investor favourite.
This checklist offers a number of considerations for investors who may be looking to buy a house to rent out.
Location
Any rental property in the city needs easy access to employment, schools, transportation and amenities such as cafes, restaurants and shops.
Research
Use market data and a trusted agent to forecast whether a potential rental house will likely deliver a capital gain that will satisfy your portfolio strategy.
Quality
Spend time assessing the state of the property. A thorough inspection will indicate any structural issues and required repairs. It’s worth assessing the plumbing and electrics, too. Even though you’ll likely have a property management team supporting you, no investor has time for a “money pit”.
Rent
Talk to a property manager about the prospective rental income the house would command. You’ll be looking for a yield of 5% or more.
Tenant profile
It’s good to have an understanding of the tenants you’d likely attract. It’s always best to find families or couples committed to the area. This avoids periods where your rental property might sit empty, losing revenue.
Seek advice
We always recommend investors take professional financial advice before committing to a new property. You should understand the tax implications of rental income, property depreciation and potential deductions.
NOTE: The information in this article is general in nature and provided as a market overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.