Investors dominate Sydney and Melbourne's innermost property hotspots

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CoreLogic's Profile of the Australian Residential Property Investor showed that around 2.6 million homes across the country are owned by investors. In fact, there are even some suburbs were almost all homes are investment properties.

According to CoreLogic head of research Tim Lawless, some broad patterns emerged in the report. For one, investors dominated the markets around typically strong rental market areas, such as inner-city locations near hospitals and universities. Examples of these are Sydney's Ultimo, North Sydney, Kingsford, and Enmore, as well as Melbourne's Elwood, Brunswick, Hawthorn, and across the Hoddle Grid.

Mining regions and holiday areas also had a large proportion of investor owners. Queensland investors are most concentrated around South Brisbane, Deception Bay, and Kelvin Grove.

According to BIS Shrapnel senior manager of residential Angie Zigomanis, one of the problems of having a high proportion of investors in one area is more volatility in the market.

"Investment properties are a discretionary purchase to some extent, and if times got harder they're the properties that would be the first to go," Zigomanis said. "It's a risky proposition if you are forced to sell at the wrong time."

For future investors, Propertybuyer buyer's agent Rich Harvey recommends purchasing investment properties in areas where homeowners rather than investors own 80 per cent of the dwellings. This tends to be the case in blue-chip suburban areas.

"When there's 70 per cent of investors, there's a lot of competition. There's rental competition where you have to be asking what differentiates your place over theirs," said Harvey.

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