A new report has advised Australian homebuyers to keep their eyes away from the country’s most popular holiday cities when aiming for a good rental yield.
Sydney, Melbourne and Brisbane, also some of the nation’s hottest property markets, emerged as the top three destinations for tourists in Australia. But for property investors, they once again returned low yields.
The report, released by one of Australia’s biggest comparison websites finder.com.au, revealed the three cities only achieved between 1.93-3.29% yields. The report looked at tripadvisor’s 2015 Traveller’s Choice Awards of the top 10 destinations in Australia.
Sydney was particularly depressing for investors, as its investment potential dropped in the last 12 months despite being tagged as the most popular holiday destination. The report said Sydney now holds the lowest value for housing property investment out of the list of 10 cities, with a yield of just 1.93%, an average rent of $855 per week and median house price of $2.308m.
In 2014, Sydney ranked second in the lowest value for housing property investment, with a yield that dropped by 1.40% from 3.33%, average housing rent dropped by $265 per week from $1,120 per week last year, while the median house price increased by $558,000 from $1.75 million.
Unit investments also did not look good for investors in Sydney, as they fell to seventh place with a yield of 5.26%, an average rent of $760 per week and median unit price of $756,000.
“For the second year in a row, we’ve seen the busiest travel spots return some of the lowest yields for investors because their demand causes high property values that outpaces their rental prices. This could potentially mean a bad investment decision”, said Michelle Hutchison, Money Expert at finder.com.au.
“Property investors need to do their research when comparing investment property hot spots, including the potential return on their investments. And the return on a property can be massively impacted by the investment home loan, so investors need to spend as much time comparing investment locations as the best value investment home loans to maximise their return.”