Mortgage lender unveils 30 'best' rentvesting markets

author-avatar By on September 30, 2021
Mortgage lender unveils 30 'best' rentvesting markets

Well Home Loans has revealed Australia's best rentvesting markets right now.

The concept of rentvesting has gained momentum recently with house prices surging and many not wanting to sacrifice location and lifestyle just to break into the property market. 

Rentvesting is the process of buying and renting out an investment property while living in a rental property yourself.

The idea is you get your foot on the property ladder, while living in a suburb that suits your wants and needs.

Data from research firm Suburbtrends has identified the areas around Australia offering growth potential and good cashflow for a budget of between $600,000 to $800,000. 

Additionally, the report has identified the inner city areas where renting is affordable due to higher vacancy rates. 

The suburbs below rank as the top 30 for investors looking to rent inner city, and buy in a high growth region according to Well Home Loans. 

10 suburbs to buy with a budget of $500,000-$600,000

Rank State Area Median Yield for Houses Median Vacancy Rate for Houses Median sale price range for houses
1 QLD Cairns-North 5.2% 5.0% $425k to $825k
2 WA Augusta-Margaret River-Busselton 4.9% 3.6% $400k to $585k
3 QLD Cleveland-Stradbroke 4.5% 6.8% $600k to $780k
4 NT Litchfield 4.4% 4.7% $600k to $740k
5 QLD North Lakes 4.4% 7.1% $475k to $620k
6 SA Port Adelaide - East 4.4% 8.2% $450k to $590k
7 WA Cockburn 4.4% 9.3% $430k to $700k
8 NSW Orange 4.3% 3.8% $387k to $540k
9 QLD Capalaba 4.3% 5.2% $545k to $720k
10 QLD Redcliffe 4.3% 7.0% $490k to $735k

Source: Suburbtrends, Well Home Loans

10 suburbs to buy with a budget of $600,000-$700,000

Rank State Area Median Yield for Houses Median Vacancy Rate for Houses Median sale price range for houses
1 QLD Nerang 4.2% 2.8% $550k to $770k
2 QLD Nambour 4.2% 2.9% $495k to $910k
3 NSW Port Macquarie 4.2% 3.9% $490k to $750k
4 QLD Bald Hills- Everton Park 4.2% 5.5% $560k to $852k
5 NSW Coffs Harbour 4.2% 5.2% $470k to $945k
6 WA Joondalup 4.1% 7.0% $485k to $865k
7 TAS Hobart - North East 4.1% 7.5% $370k to $785k
8 QLD Ormeau - Oxenford 4.0% 4.4% $545k to $915k
9 QLD Sunshine Coast Hinterland 3.9% 3.5% $571k to $880k
10 QLD Nundah 3.8% 8.5% $600k to $826k

Source: Suburbtrends, Well Home Loans

10 suburbs to buy with a budget of $700,000-$800,000

Rank State Area Median Yield for Houses Median Vacancy Rate for Houses Median sale price range for houses
1 QLD Southport 4.2% 9.5% $675k to $720k
2 NSW Queanbeyan 4.1% 3.0% $630k to $890k 
3 QLD Buderim 4.0% 5.9% $600k to $830k
4 ACT Tuggeranong 4.0% 5.5% $675k to $807k
5 ACT Belconnen 3.8% 7.5% $670k to $965k
6 QLD Wynnum - Manly 3.8% 6.9% $630k to $855k
7 QLD The Gap-Enoggera 3.7% 9.1% $645k to $830k
8 QLD Caloundra 3.7% 6.3% $515k to $920k
9 QLD The Hills District 3.7% 2.6% $600k to $830k
10 QLD Gold Coast - North 3.6% 5.5% $520k to $900k

Source: Suburbtrends, Well Home Loans

Why are those areas regarded as locations to consider buying a house?

These are areas where upwards pressure is being placed on weekly rents and property prices.

The criteria focusses on three data points:

  • Vacancy rates are below 1.5%
  • Rental yields are above 3.5%
  • Inventory levels are less than five months

Inventory levels refers to how long it would take for all inventory to be sold, provided no more dwellings are added to the market.

These factors mean rentvestors have an opportunity to rent out their investment property whilst it gains capital value.

The report also highlights where rentvesters may look to live themselves while they rent out their property. 

Where is it better to rent than buy?

The report also identified areas where downward pressure is being placed on weekly rent and property prices. 

The report focused on three main data points to identify these rental markets:

  • Vacancy rates are above 1%
  • Yields are below 5%
  • Over the previous 10 years, median prices for units have grown at less than half the rate of houses.

NSW

  • Parramatta
  • Canterbury
  • Blacktown
  • Newcastle
  • Tweed Valley

VIC

  • Melbourne City
  • Essendon
  • Brunswick
  • Casey-North
  • Stonnington-West

QLD

  • Brisbane Inner-East
  • Broadbeach-Burleigh

WA

  • Fremantle
  • South Perth
  • Melville
  • Cottesloe-Claremont

ACT 

  • South Canberra

TAS

  • Hobart Inner

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of October 23, 2021. View disclaimer.



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Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Aaron joined Savings.com.au in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

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