Apartment investors in New South Wales are in for a treat as demand for rental homes is likely to rise with the border reopening.
BuyersBuyers co-founder Pete Wargent said there are 10 suburbs in New South Wales that have long-term growth prospects for investors looking to invest in apartments.
“Our analysis shows that there are some strong opportunities for investors with a budget ranging from $800,000 up to $1.2m, and requiring a rental yield of at least 3%,” he said.
|
Suburb |
SA4 Region |
Median Unit Price ($) |
12-month Price Growth (%) |
|
Northern Beaches |
1.10m |
35 |
|
|
Manly Vale |
Northern Beaches |
1.11m |
35 |
|
Brookvale |
Northern Beaches |
1.12m |
30 |
|
Maroubra |
Eastern Suburbs |
1.09m |
23 |
|
Kensington |
Eastern Suburbs |
1.06m |
25 |
|
Kingsford |
Eastern Suburbs |
997,565 |
29 |
|
Dulwich Hill |
Inner West |
856,349 |
15 |
|
Leichardt |
Inner West |
1.07m |
19 |
|
Lane Cove |
North Sydney and Hornsby |
952,659 |
21 |
|
Lane Cove North |
North Sydney and Hornsby |
866,669 |
20 |
Mr Wargent said trends created by the unprecedented border closures and restrictions maid the pandemic will only be “transitory” and are just short-term noises.
“Investors seeking long-term capital growth and strengthening rental returns should focus on certain opportunities as rents get set to rise.”
“We look for boutique unit developments with reasonable strata levies, and if the budget permits, look for family-friendly units with owner-occupier appeal, in those popular suburbs where the supply is somewhat capped.”
As international borders reopen, Mr Wargent said there could be a revitalization in the apartment markets, especially if rental supply remains tight.
“Reserve Bank of Australia research has previously shown that new migrants and arrivals to Australia tend to have only a limited impact on the housing turnover rate, because most new arrivals are renters initially, especially international students,” he said.
“That means a lot more demand for rentals is coming in 2022. As the border reopens, many parts of Australia may experience chronically tight rental markets.”
The looming rental shortage is driven by several factors, including the slowdown in the entry of investors from China that dampened the supply of new apartments, particularly the high-rise ones.
“We also have a very strong population pyramid in Australia which is driving a surge in household formation — a substantial number of young renters have entered the rental market, as the lockdowns encouraged more renters to find their own space at the earliest available opportunity,” Mr Wargent said.
—
Photo by @jamie_davies on Unsplash
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