Friday, January 13, 2023
HomeMortgageHere's Australia's 30 best suburbs for rentvesting

Here’s Australia’s 30 best suburbs for rentvesting


New data from online lender Well Money has revealed 30 of the best rentvesting markets and 30 unit markets where it’s better to buy then rent.

Despite falling property prices in many capital city suburbs, it is still hard for first home buyers to enter those areas with a budget between $500,000 and $800,000, especially as rising interest rates are reducing borrowing capacity.

Many are often forced to choose between buying a unit in their local area or buying a house on the fringes of the city, which is why the trend of rentvesting is rising in popularity. Simply put, rentvesting involves buyers renting a property where they want to live and buying an investment property in a suburb they can afford.

Well Money CEO Scott Spencer (pictured above) said the 30-unit suburbs identified had subpar long-term growth potential and the 30 rentvesting markets identified were places where you could buy a house that not only fitted a budget of $500,000 to $800,000, but also had good long-term growth potential and good cashflow.

“Prices are falling, which is making housing more affordable, however, prices are falling from a high base so they’re still elevated,” Spencer said.

“Another challenge for first home buyers is that while interest rates remain low by historical standards, they’re rising and are likely to rise further, which is affecting their borrowing capacity. First home buyers who live in capital cities and have a budget of $500,000 to $800,000 have a tough choice to make.”

Spencer said in the future if the investment property grew in value, first home buyers could potentially sell it and use the money to buy an owner-occupied house in a desirable suburb in their current city.

“That said, it would be important to take a long-term view with any investment purchase,” he said. “Many markets around Australia are softening right now, so prices might have further to fall before we potentially enter the next growth cycle.”

Natalie Sheehan, head of distribution at non-bank lender Brighten Home Loans said first-home buyers fear being priced out of the market as the cost of living rises.

“There are also government [home ownership] schemes available,” Sheehan said.  “I can see why the government is encouraging this. However, timing is everything as allocations are limited to only a number of spaces available.”

Here are Well Money’s best suburbs for purchasing and rentvesting:

Purchasing budget of $500,000 to $600,000

Spencer said with a budget of up to $600,000, people could purchase a unit in about 30% of Sydney suburbs, 65% in Melbourne and 95% in Brisbane.














State

Suburb

Median Sale


Price Units

Vacancy Rates Units

Median Weekly Rent Units

NSW

Miller

$570,000

3.7%

$220

NSW

Narellan

$575,000

1.6%

$430

NSW

Wentworthville

$575,000

1.8%

$430

VIC

Manor Lakes

$585,000

2%

$330

VIC

Noble Park North

$590,000

2%

$380

VIC

Ascot Vale

$580,000

2.1%

$380

VIC

Ormond

$580,000

1.8%

$385

VIC

Deer Park

$510,000

2.3%

$350

VIC

Sunshine North

$550,000

3.8%

$395

QLD

Redland Bay

$525,000

1.8%

$455

 

Spencer said if people didn’t want to buy a unit in one of the above suburbs, they could rentvest in one of the below suburbs instead.

“These 10 suburbs all feature suburbs where houses are priced in the same price range as the suburbs on the units list,” he said.  “These are locations where upwards pressure is being placed on weekly rents and property prices as vacancy rates are below 1.5% and yields are above 3.5%.

Suburbs to rentvest – $500,000 to $600,000 range














State

Suburb

Median Sale Price Houses

Vacancy Rates Houses

Median Weekly Rent Houses

NSW

Karuah

$562,500

0%

4.4%

TAS

Claremont

$560,000

1.1%

4.4%

TAS

Invermay

$502,000

0.8%

4.4%

VIC

Wodonga

$505,000

0.5%

4.3%

TAS

Summerhill

$535,000

0.6%

4.3%

TAS

Kings Meadows

$550,000

0.7%

4.3%

TAS

St Leonards

$535,000

1.3%

4.2%

VIC

Tawonga South

$565,000

0%

4.1%

NSW

Bega

$582,000

1.2%

3.8%

NSW

Woodberry

$555,000

0%

3.7%

 

Purchasing budget of $600,000 to $700,000

Spencer said if you had a budget up to $700,000, you could buy a unit in about 50% of Sydney suburbs, 85% in Melbourne and 100% in Hobart.














State

Suburb

Median Sale


Price Units

Vacancy Rates Units

Median Weekly Rent Houses

NSW

Sefton

$610,000

2.1%

$400

VIC

West Footscray

$620,000

2.4%

$325

VIC

South Kingsville

$670,000

1.9%

$360

VIC

Thornbury

$645,000

1.9%

$360

VIC

Parkville

$645,000

2.2%

$395

VIC

Coburg North

$695,000

1.8%

$430

VIC

Malvern

$639,000

2.1%

$400

VIC

Caulfield North

$666,000

1.8%

$420

VIC

Northcote

$659,000

2.1%

$420

VIC

Ripponlea

$618,000

2.8%

$400

 

Spencer said the below suburbs each had houses that were priced in the same price range as the suburbs on the units list.

Suburbs to rentvest – $600,000 to $700,000 range














State

Suburb

 

Median Sale


Price Houses

Vacancy Rates Houses

Median Weekly Rent Houses

TAS

Berriedale

 

$620,000

0.7%

4.2%

TAS

Norwood

 

$603,000

1.4%

4.1%

TAS

Mornington

 

$630,000

0%

4.1%

NSW

Raymond Terrace

 

$610,000

0.4%

4.1%

TAS

Lutana

 

$662,000

1%

4.1%

VIC

Baranduda

 

$610,000

1.2%

4%

NSW

Mallabula

 

$620,000

0%

4%

NSW

Wauchope

 

$635,000

0.8%

4%

TAS

Riverside

 

$632,000

1%

3.9%

TAS

Newstead

 

$680,000

0.5%

3.8%

 

Purchasing budget of $700,000 to $800,000

Spencer said with a budget up to $800,000, you could buy a unit in about 70% of Sydney suburbs, 95% in Melbourne, 98% in Perth, 100% in Hobart and Canberra.














State

Suburb

Median Sale Prices Units

Vacancy Rates Units

Median Weekly Rent Units

NSW

Asquith

$710,000

1.9%

$490

VIC

Forest Hill

$791,500

1.8%

$400

VIC

Strathmore

$750,000

4.3%

$400

VIC

Hughesdale

$775,000

1.7%

$420

VIC

Clayton

$765,000

1.8%

$415

VIC

Bulleen

$775,000

2.1%

$480

VIC

Fitzroy

$798,400

2.8%

$500

WA

Burswood

$775,000

2%

$545

TAS

North Hobart

$775,000

2.1%

$465

ACT

Giralang

$755,000

1.9%

$520

 

Spencer said the below suburbs each had houses that were priced in the same price range as the suburbs on the units list.

Suburbs to rentvest – $700,000 to $800,000 range














State

Suburb

Median Sale Price Houses

Vacancy Rate Houses

Median Weekly Rent Houses

TAS

Geilston Bay

$770,000

1%

4.1%

NSW

Medowie

$770,000

0.8%

4%

ACT

Charnwood

$718,000

1%

4%

NSW

Macquarie Hills

$785,000

0%

4%

NSW

Maryland

$715,000

0.3%

3.9%

NSW

Watanobbi

$715,000

0.9%

3.9%

NSW

Hawks Nest

$710,000

0.8%

3.8%

NSW

Cardiff South

$740,000

1.2%

3.8%

NSW

Mt Hutton

$755,000

1.3%

3.8%

NSW

Blue Haven

$750,000

0.2%

3.7%

 

On January 9, CoreLogic revealed Australian home values record biggest fall ever, dropping 8.40% on January 7, after their peak in May 2022.

“In addition to constrained borrowing capacity, higher interest costs may be dissuading potential buyers altogether,” said CoreLogic.

“Australians are also more indebted today than through historic periods of rate rises, with the latest Reserve Bank of Australia’s estimate of housing debt-to-income ratio sitting at 188.5%. A decade ago, this figure was 162.0% and in 2002 the ratio was 130.2%.”

What do you think about renvesting in 2023? Let us know in the comments below.

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