- Includes a variety of outer ring suburbs and regional hubs.
- There are pros and cons to considering a new home.
- Rents for the top 20 were typically between $500 to $700 per week.
Property investors likely breathed a sigh of relief as the Reserve Bank of Australia (RBA) announced today that interest rates would be held at 4.10%.
While rental reform is one factor leading investors to reconsider having skin in the game, another major factor is the financial cost of entering the market.
Experts have previously noted that higher rates can make property investing appear less appealing, meaning less supply coming onto the rental market and pushing rentals higher. One reason is that investors may no longer be able to access finance.
Severe supply shortages are also driving prices up, with REIWA announcing today that Perth’s median rent prices hit new highs in August. Median rent for homes in Perth rose to $575 per week, with houses at $600 per week, and units at $550 per week.
The rate hold, then, appears to be a win-win for both investors and renters, particularly as it was observed that there may be a correlation between rates and rents. However, some are still waiting with bated breath for the next few month’s results.
Experts told The Property Tribune that a more robust recovery is likely to be held back by a high cash rate and affordability concerns; concerns were also aired regarding whether more rate rises were on the horizon, given the Reserve Bank’s expectations that inflation will not return to target until the end of 2025.
UPDATE: Home values across Australia have reached the $10 trillion mark again; it was last at this point in June 2022. Buoying the market is a rising median price, now $732,886, and a growing number of homes, now 11 million.
Are new homes the solution?
‘More supply’ is on everyone’s lips, and a national plan was recently announced to deliver 1.2 million new homes; individual states also recently announced plans to boost property supply. While the construction crisis will mean the plan won’t be without its challenges, the move was broadly welcomed by industry.
OpenLot recently released its top 20 suburbs for investing in new houses report, noting a ‘myriad of advantages’ to be had.
The report noted that a new build gives investors the opportunity to customise the property; acquire a newer, more energy-efficient property; and take advantage of government incentives that may otherwise not be available to properties on the secondary market.
“This Top 20 list showcases the dynamic potential of Australia’s real estate market, particularly in new house investments,” said CEO and co-founder of OpenLot, Qi Chen.
“Our methodology, with a focus on potential yield, vacancy rates, and typical rent, paints a clear picture of opportunity, especially in areas like Hope Island, QLD, and Echuca, VIC.”
Australia’s top 20 suburbs for investing in new houses
| Rank | Suburb | State | Postal Code | Potential Yield | Vacancy Rates | Typical Rent |
|---|---|---|---|---|---|---|
| 1 | Hope Island | QLD | 4212 | 7.61% | 2.1% | $1,200 |
| 2 | Echuca | VIC | 3564 | 7.20% | 1.8% | $760 |
| 3 | Andergrove | QLD | 4740 | 7.18% | 1.0% | $570 |
| 4 | Kalbarri | WA | 6536 | 7.09% | 0.0% | $750 |
| 5 | Edmonton | QLD | 4869 | 7.04% | 0.9% | $550 |
| 6 | Shoal Point | QLD | 4750 | 6.68% | 0.9% | $520 |
| 7 | Lake Cathie | NSW | 2445 | 6.67% | 2.2% | $640 |
| 8 | Lakelands | WA | 6180 | 6.65% | 1.4% | $550 |
| 9 | Southern River | WA | 6110 | 6.62% | 0.3% | $630 |
| 10 | Cannonvale | QLD | 4802 | 6.56% | 0.7% | $750 |
| 11 | Rural View | QLD | 4740 | 6.56% | 0.8% | $530 |
| 12 | Dalyellup | WA | 6230 | 6.50% | 0.6% | $550 |
| 13 | Brabham | WA | 6055 | 6.48% | 1.5% | $600 |
| 14 | Baldivis | WA | 6171 | 6.43% | 0.8% | $550 |
| 15 | Hilbert | WA | 6112 | 6.37% | 0.5% | $500 |
| 16 | Armidale | NSW | 2350 | 6.27% | 2.3% | $500 |
| 17 | Wangaratta | VIC | 3677 | 6.27% | 1.0% | $500 |
| 18 | Australind | WA | 6233 | 6.24% | 0.6% | $570 |
| 19 | Jindalee | WA | 6036 | 6.19% | 1.5% | $625 |
| 20 | Bullsbrook | WA | 6084 | 6.16% | 0.0% | $590 |
Source: OpenLot.
Breaking down the top five
Mostly located in the regions or outer rings of regional hubs, these suburbs all recorded rental yields of above 7%.
Hope Island
Located on the northern fringe of the Gold Coast, this locale appears to be somewhat of an anomaly, compared to the remainder of the top five. Home to a handful of golf clubs, a major chain hotel, and an aged care residence, the location has access to some of the best amenities, compared to other locations in the top five.
The entry point into Hope Island is particularly steep, compared to other locales, with SQM Research data showing the latest asking prices for 4212, including Hope Island, are north of the million dollar mark. Units for the suburb are also around the mid $700,000s.
Weekly asking property prices for 4212, including Hope Island
Echuca
This regional Victorian suburb is almost three hours north of Melbourne, close to the Victoria-New South Wales border.
Despite its regional location, entry to the Echuca market is perhaps not as affordable as you may have expected. SQM asking price data for the locale shows homes went for some $700,000 early in 2022, with the latest figures showing prices hovering just under the $650,000 mark.
Weekly asking property prices for 3564, including Echuca
Andergrove
Located to the north of Mackay, rentals in the suburb are tightly held. SQM data for the postcode 4740, including Andergrove, found that vacancies were 1.0% earlier this year, but have since dropped to 0.5%.
Entry into the Andergrove market seems a tad more affordable, with weekly asking prices topping out at the $500,000 mark. The unit market was a much more affordable $300,000.
Weekly asking property prices for 4740, including Andergrove
Kalbarri
The tourist town is located some six to seven hours north of Perth.
Edmonton
Located on the southern fringe of Cairns, rents in the suburb have been steadily rising over the past decade, according to SQM data.
While there were some fluctuations to rents throughout Covid, Edmonton appears to have weathered the storm well, with rents coming in at under $400 per week for all property types in early 2020, rising to over $550 per week at the latest count.
Weekly rents for 4869, including Edmonton
Entry into the Edmonton market appears to be relatively affordable too, with property prices typically around the $500,000 mark for houses, and $200,000 mark for units.
Weekly asking property prices for 4869, including Edmonton
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UPDATE: Building activity remains unsurprisingly subdued, with the latest edition of the Housing 100 report revealing fewer home starts across 2022/23.
UPDATE: The recent New South Wales state budget is putting significant impetus behind getting the state ready for new homes, with some $1.5 billion to go into housing-related infrastructure.
