The top 40 hotspots that ‘pay for themselves’
Want to find property that can cover its own holding cost? New research has found the five best suburbs in each capital city that can do just that.
According to Propertyology and its head of research Simon Pressley, there are many capital city suburbs that have rental returns so high, investors can essentially just wait for the property to pay itself off.
“In some locations, even with a low 10 per cent deposit, the typical property is putting money back into the owner’s pocket each year,” Mr Pressley said.
“Even in suburbs where you do need to contribute, the maximum an investor will be out-of-pocket is around $100 per week, or the cost of a decent date night.”
In terms of self-serving properties, the research revealed Darwin and Hobart have the best opportunities for investors, Mr Pressley said.
“Australia’s best capital city cash flow suburb is in Karama in Darwin, which is just 10 kilometres from the [CBD] and has a median house price of only $392,000,” he said.
In Mr Pressley's example of Karama, he said the investment will generate a positive cash flow of $3,600 per year if purchased with a 20 per cent deposit or $1,700 per year using 10 per cent.
“While Darwin’s market has been an underperformer over the past three years, investors won’t be as concerned if they own a property that’s actually supplementing their income,” he explained.
Down in Hobart, the research showed there were opportunities for investors under $250,000 in suburbs such as Risdon Vale and Chigwell.
“Price growth cycles are still ahead for Brisbane, Adelaide and Perth, so high cash flow options are likely to pay off sooner in terms of value gains,” Mr Pressley said.
“Fifteen kilometres south of Brisbane’s CBD, a typical house in the suburb of Coopers Plains can be purchased for just $400,000 and will be cash flow positive by $3,600 per year.
“Cedar Vale, Russel Island, Blackstone and Gailes round out Brisbane’s top five and are cash flow positive opportunities, too.”
However, the research warned against buying into a house in Coorparoo with a 20 per cent deposit, as it can cost an investor $15,000 per year.
Meanwhile, self-serving Perth property can be found between 25 kilometres to 35 kilometres from the city.
“Typical housing in suburbs like Brookdale, Hillman, Dayton, Armadale and Medina are all under $300,000, making them very price accessible while waiting for the next market upswing,” Mr Pressley said.
Looking to Sydney, Melbourne and Canberra however, the research revealed no suburbs that can be cash flow positive with a deposit of 20 per cent or less.
“Even though it’s 80 kilometres from Sydney’s [CBD], the Central Coast (Wyong and Gosford) are technically part of Greater-Sydney, while Medlow Bath in the Blue Mountains has a median house price of $500,000,” Mr Pressley said.
If investors want to find houses with good cash flow, they will need to expand their search to outside of the Sydney area.
“For example, a house in Lake Munmorah on the Central Coast will cost $3,093 per year to hold,” he suggested.
“Compare that to somewhere like Blacktown, 38 kilometres west of Sydney. That suburb has a median house price of $740,000 and a property there will cost $11,775 per year to maintain, even if you have a 20 per cent deposit.
“The figures are even worse for Hornsby, where a median house price of $1.33 million will leave you $26,152 a year worse off.”
A similar scene can be found in Victoria with the Greater Melbourne area offering Melton as the best place to invest into, which has a median house price of about $400,000, costs $4,000 to hold with a 20 per cent deposit and is located 40 kilometres northwest of the CBD.
“In the Yarra Ranges, the entry price for a typical property is slightly more affordable and the annual impact on the household budget could be less than $2000,” Mr Presley said.
“Compare those figures to somewhere like Doncaster, 17 kilometres from the CBD, where a typical house will cost $34,702 a year to hold under the same parameters.
“Similarly, Brunswick housing sees its investors contributing $23,805 per year to maintaining the holding – a tough ask if you’re trying to be patient.”
However, this research should not be taken solely on its own, as Mr Pressley reminded that cash flow is just a single element to consider when looking to invest. Other elements include proximity to job centres, the local demographics of an area and other influencing factors on housing supply.
The research analysed detached housing and looked at median rent, interest expenses on both 10 per cent and 20 per cent deposits as well as considering any additional fees for maintenance, council rates, insurances and property management.
The 40 best suburbs for property investment that can cover their own costs, according to Propertyology, are:
|
Suburb |
Distance |
Median |
Annual holding costs @ 80% LVR |
Annual holding costs @ 80% LVR |
|
Karama, NT |
10.5 |
$392,000 |
$ 3,682 |
$ 1,722 |
|
Coopers Plains, Qld |
15.0 |
$398,750 |
$ 3,632 |
$ 1,638 |
|
Risdon Vale, Tas |
8.1 |
$222,500 |
$ 3,435 |
$ 2,322 |
|
Gagebrook, Tas |
16.1 |
$170,000 |
$ 3,339 |
$ 2,489 |
|
Chigwell, Tas |
10.7 |
$260,000 |
$ 3,033 |
$ 1,733 |
|
Muirhead, NT |
12.0 |
$650,000 |
$ 2,915 |
($ 335) |
|
Cedar Vale, Qld |
45.7 |
$480,000 |
$ 2,797 |
$ 397 |
|
New Norfolk, Tas |
24.8 |
$212,500 |
$ 2,737 |
$ 1,674 |
|
Bridgewater, Tas |
17.2 |
$210,000 |
$ 2,617 |
$ 1,567 |
|
Malak, NT |
10.1 |
$450,000 |
$ 2,460 |
$ 210 |
|
Davoren Park, SA |
27.0 |
$188,750 |
$ 2,369 |
$ 1,425 |
|
Smithfield Plains, SA |
28.2 |
$199,500 |
$ 2,219 |
$ 1,257 |
|
Elizabeth North, SA |
26.1 |
$197,750 |
$ 2,089 |
$ 1,110 |
|
Elizabeth East, SA |
22.7 |
$210,000 |
$ 1,958 |
$ 908 |
|
Russell Island, Qld |
41.2 |
$190,000 |
$ 1,880 |
$ 930 |
|
Wagaman, NT |
10.2 |
$490,000 |
$ 1,738 |
$ 712 |
|
Blackstone, Qld |
28.0 |
$301,000 |
$ 1,612 |
$ 107 |
|
Gailes, Qld |
19.4 |
$250,000 |
$ 1,456 |
|
|
Virginia, NT |
22.7 |
$630,000 |
$ 1,409 |
$ 1,741 |
|
Hackham West, SA |
23.7 |
$261,500 |
$ 1,216 |
($ 92) |
|
Brookdale, WA |
27.5 |
$258,000 |
$ 917 |
($ 373) |
|
Hillman, WA |
37.7 |
$278,000 |
$ 117 |
($ 1,273) |
|
Dayton, WA |
15.1 |
$432,500 |
$ 86 |
($ 2,077) |
|
Gilmore, ACT |
15.5 |
$545,000 |
($ 22) |
($ 2,747) |
|
Medina, WA |
31.5 |
$238,000 |
($ 40) |
($ 1,230) |
|
Gowrie, ACT |
14.9 |
$576,500 |
($ 404) |
($ 3,287) |
|
Richardson, ACT |
16.6 |
$495,000 |
($ 438) |
($ 2,913) |
|
Armadale, WA |
25.7 |
$250,000 |
($ 520) |
($ 1,770) |
|
Charnwood, ACT |
12.2 |
$460,000 |
($ 575) |
($ 2,875) |
|
Calwell, ACT |
18.0 |
$550,000 |
($ 881) |
($ 3,631) |
|
Millgrove, Vic |
61.7 |
$365,000 |
($ 1,826) |
($ 3,651) |
|
Rockbank, Vic |
27.9 |
$505,000 |
($ 2,375) |
($ 4,900) |
|
Kurunjang, Vic |
36.9 |
$388,750 |
($ 2,996) |
($ 4,939) |
|
Lake Munmorah, NSW |
82.1 |
$490,000 |
($ 3,093) |
($ 5,543) |
|
Watanobbi, NSW |
68.8 |
$495,000 |
($ 3,293) |
($ 5,768) |
|
Mannering Park, NSW |
85.2 |
$480,000 |
($ 3,681) |
($ 6,081) |
|
Kanwal, NSW |
69.4 |
$495,000 |
($ 3,732) |
($ 6,207) |
|
San Remo, NSW |
77.4 |
$465,000 |
($ 3,740) |
($ 6,065) |
|
Melton South, Vic |
36.4 |
$398,000 |
($ 3,915) |
($ 5,905) |
|
Warburton, VIC |
64.7 |
$423,500 |
($ 3,946) |
($ 6,064)
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