Residz Team 3 min read
You can’t afford to buy, but soon, will you be able to afford to rent? With zero to one per cent vacancy rates in some suburbs and regions across Australia it’s a great time to be a landlord in those spots and a lousy time to be a renter. Here we look at places where rents are expected to rise, and the investability scores of a few of them.
Lifestylers spreading out around the country are taking many of the available rentals. Local renters unable to afford to buy are also staying put, so supply of homes to lease is low (exacerbated by landlords cashing in during the 2021 housing boom). Those regions with the lowest vacancy rates (note: must be vacant for 21 days to qualify) are the ones more likely to see rent increases. Recent Hood data on the Rate City website listed 20 suburbs and regions where rents have risen at least 32% in the past 12 months.
Rate City listed the top 20 suburbs and their median weekly rent for houses or units that Hood Tenant Report ranked in the order of likelihood for rent to increase:
You will notice no region in Victoria made the top 20 list but Western Australia has four of the five top areas expected to see severe pressure on rents. Queensland had the most number of areas with strong rental performance and potential, with six properties in the top 20.
So, let’s run a few of these suburbs across the Residz Investability Index(™) tool and see what historic demand and demographics can tell us about its future potential.
Sorrento, WA: Residz’s index gives Sorrento an investability score of 71 out of 100 (state average is 54). Verdict: Very good buying with strong house prices and high income levels. At time of writing, a one-bedroom unit is listed for sale on Residz by Ray White for $175,000.
Doonan, Qld: Residz gives an investability score of 69 out of 100 (state average is 66). Verdict: Good buying in the Noosa hinterland, with the population density and demographics predictive of good future demand.
Sussex Inlet, NSW: Residz gives an investability score of 37, below the state average of 59. The pandemic could spell a revitalisation of this area, given it offers a great lifestyle but Sussex Inlet has historically scored low on population, income, occupation, and even housing prices. Verdict: Fair buying. Research well, and proceed armed with lots of information.
Dulwich, SA: Residz gives this region of Toorak Gardens an investability score of 80 out of 100. Verdict: Very good buying with high scores (against the state average) for income, house prices, industry, population, and occupation. This charming suburb full of heritage-listed homes might be a nice little investment if you have the money.
Deloraine, Tas: Residz’s index gives an investability score of 34 out of 100, below the state average of 45. With homes for sale on Residz for $375,000 in Deloraine, it’s a sign this affordable area is not historically in high demand. The charming historic village about 3 hours from Hobart has lots going for it, but isn’t as popular as Ross (arguably the finest nineteenth century village in Australia) or Richmond (elegant Georgian architecture). Verdict: Fair buying, but research well before you do.
Investing in property requires a lot of research, but we can see that a number of Queensland areas and Adelaide suburbs may still be some way off their property price peak. This article shows that while pressure on rents can make an investment property attractive, it’s not the only factor that goes into making one home a good long-term investment. Make sure you take income, demographics, and local industry into account when purchasing an investment property, plus you may like to check out local crime trends, bushfire risk, and proximity to local amenities like the right schools and great cafes.
Image: Sussex Inlet, NSW, from Visit NSW website