Where to buy rental property in Brisbane

With Sydney and Melbourne becoming increasingly unaffordable, Brisbane is being touted as the next investor hotspot in Australia. This is great news for local property owners and investors, but the trick is knowing which suburbs to buy in. If you are planning to purchase an investment property in Brisbane, there are a number of ways to ensure you choose well.

Know what you want from your rental property

Before narrowing your search down to specific suburbs, research which type of property will work hardest for you. Factors such as your budget and whether you want to buy a house or a unit will have an impact on the areas you buy in.

Capital gains and tax implications should also be considered, as well as the length of time you want to own the property for. There are suburbs with long-term potential that will not be suitable if you only plan to have the property for a short amount of time.

Where to start looking

Once you know what you want, it’s time to start the property search. While property within 10 km of the city has traditionally performed well, experts such as demographer Bernard Salt believe that suburbs within 6–20 km of Brisbane are the ones to watch over the next decade.

High density and market saturation in the inner city mean that more developers are likely to start turning their focus towards middle suburbia. As more houses are built, amenities such as schools, shopping centres and public transport are likely to follow, and these are all highly attractive to tenants.

The amount of construction in the inner city has led to speculation that Brisbane is heading for apartment oversaturation in these areas. Should you wish to purchase an apartment, you may experience a slight dip in demand as these developments are completed over the next year or two. Having said that, however, these areas will always be appealing to tenants and property close to the city is likely to perform well as a long-term investment.

If your research shows that a specific suburb is experiencing a lot of growth, investigate the affordability of nearby areas, which are likely to shoulder future demand. You may get a better price on the property and still be able to take advantage of the area’s growth.

Things to consider

When you are looking at certain suburbs, assess the following:

  • Vacancy rates
  • Growth history
  • Rental yields
  • Planned infrastructure projects
  • Proximity to local amenities and transport

You will need to weigh these things up against one another to decide whether the suburb is right for you. For example, if an area has high rental yields and high vacancy rates, you may experience long periods between tenants. In these situations, you will need to ensure you have adequate cash flow to cover the lost rent. If you don’t think you can cope with long vacancy periods, you may need to look in areas with higher demand, even if this means lower rental yields.

Brisbane suburbs with high rental yields

While rental demand and prices do typically increase as you get closer to the city, that doesn’t always mean yields there are higher. In fact, some of the best performing suburbs in terms of rental return are in the Logan and Ipswich regions. In the inner city, rental yields are around 1.5–2% higher for units than houses.

Here are some of the suburbs leading the charge in terms of rental yield.

Houses

Kurwongbah

  • Rental yield: 6.6%
  • Median sale price: $550,000

Leichardt

  • Rental yield: 6.4%
  • Median sale price: $225,000

Eagleby

  • Rental yield: 6.1%
  • Median sale price: $275,000

Wacol

  • Rental yield: 6.1%
  • Median sale price: $307,000

Units

Redbank

  • Rental yield: 7.9%
  • Median sale price: $180,000

Lawnton

  • Rental yield: 7.4%
  • Median sale price: $225,000

East Ipswich

  • Rental yield: 7.1%
  • Median sale price: $202,000

Waterford

  • Rental yield: 7.6%
  • Median sale price: $229,000

To investigate rental yield and demand in other suburbs, use the realestate.com.au investor tool

Investment loan update

A lot of would-be investors have recently shelved the idea of purchasing property because of changes to investor loans. If you are ready to buy, you shouldn’t let this deter you, as there are still some great rates around for investors. Compare your options and you may be surprised what you can get.

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Luke Cashin
0419 733 862
luke.cashin@mortgagechoice.com.au 
Your Garden City Mortgage Broker, Brisbane 

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Posted in: Property investment

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