Low interest rates, tight rentals and a rising property market is creating ideal buying conditions for investors.
When it comes to investing in a rental property, location plays a key role as capital growth often provides a major source of long term returns.
The golden rule is to look for a location offering three important characteristics: good transport links, a growing population and plenty of nearby amenities including quality schools, parks, shops and leisure facilities.
Let's take a look at the latest hot spots.
Figures from research group RP Data ¹ show Brisbane's market has delivered a total (year on year) return of 6.2%r. For growth potential, the Sunshine Coast is worth a look with values likely to be boosted by construction of a major hospital due for completion in 2016.
New South Wales
The Sydney property market achieved a total return of 7.3% over the last year. Check out units in western/south western suburbs like Blacktown or Fairfield where prices are below $250,000 and yields of around 5% could see a rental property pay for itself.
Melbourne property values rose 1.5% in February 2013, and the recent auction clearance rate of 70% indicates buyer confidence. Well-located suburbs like Brunswick and Coburg offer affordability plus proximity to the city.
The shelving of the Olympic Dam expansion project has kept the SA market affordable, and rental yields remain healthy at around 4.7%. Suburbs close to the CBD offer better prospects for growth.
Population growth is expected to support the Perth property market, which achieved a total return (year on year) of 8.5%. Near-city locations like Vincent and Stirling have been especially strong performers.
The resource boom continues to push up Darwin property values, with the market dishing up a total year on year return of 12.4%. Yields are high too - sitting at around 6.3%. Palmerston, with its greater affordability, may be more accessible for many investors.
Investors in Tasmania are earning rental yields of more than 5%. In Hobart, Kingston and Moonah have a reasonably robust job markets, and this may underpin future property price growth.
Talk to us about an investment loan to help you make the most of a rental property.
¹ RP Data-Rismark February Hedonic Home Value Index Results, 1 March 2013