The suburbs where your property will pay for itself

By Lucy Dean

September 03 2018
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Spoiler alert: they’re not in Sydney or Melbourne.

suburbs, property, investments, investing

Property analyst Propertyology has released research naming the top capital city suburbs for rental properties, with Sydney, Melbourne and Canberra notably absent.

“Our research proves there are plenty of suburbs within Australia’s capital cities where high rent returns make it easier on landlords to patiently wait for equity gains,” said Propertyology managing director Simon Pressley.

“In some locations, even with a low 10 per cent deposit, the typical property is putting money back into the owner’s pocket each year.”

However, the nation’s premier cities have a paucity of suburbs in which an investor can purchase a detached house and have it be cash flow positive with a deposit of 20 per cent or less.

Noting that cash flow is only one factor in what makes an investment property worthwhile, Mr Pressley said investors looking for strong cash flow need to expand their horizons.

“Even though it’s 80 kilometres from Sydney’s [CBD], the Central Coast (Wyong and Gosford) are technically part of greater Sydney, while Medlow Bath in the Blue Mountains has a median house price of $500,000,” he said.

“Compare that to somewhere like Blacktown, 38 kilometres west of Sydney. That suburb has a median house price of $740,000 and a property there will cost $11,775 per year to maintain, even if you have a 20 per cent deposit.”

“The figures are even worse for Hornsby, where a median house price of $1.33 million will leave you $26,152 a year worse off.”

That’s before investors account for the end of Sydney’s growth phase, Mr Pressley said, adding that Victoria is in a similar situation.

“Victoria paints a similar picture with greater Melbourne’s best locations for cash flow investors within the municipality of Melton – 40 kilometres north-west of the CBD,” he said.

“Here, the median house price is around $400,000 and will cost those with a 20 per cent deposit just $4,000 per year to hold.”

Then there’s inner city Brunswick, which demands an average $23,805 a year to maintain the holding: “A tough ask if you’re trying to be patient.”

However, Mr Pressley acknowledged that high cash flow and capital growth potential don’t necessarily go hand-in-hand.

Nevertheless, he said, “they can be found in every state”.

So, which suburbs made the cut?

Suburb	Distance from CBD (in kilometres)	Median house price	Annual holding costs @ 80% LVR	Annual holding costs @ 80% LVR
Karama, NT	10.5	$392,000	$ 3,682	$ 1,722
Coopers Plains, Qld	15.0	$398,750	$ 3,632	$ 1,638
Risdon Vale, Tas	8.1	$222,500	$ 3,435	$ 2,322
Gagebrook, Tas	16.1	$170,000	$ 3,339	$ 2,489
Chigwell, Tas	10.7	$260,000	$ 3,033	$ 1,733
Muirhead, NT	12.0	$650,000	$ 2,915	($ 335)
Cedar Vale, Qld	45.7	$480,000	$ 2,797	$ 397
New Norfolk, Tas	24.8	$212,500	$ 2,737	$ 1,674
Bridgewater, Tas	17.2	$210,000	$ 2,617	$ 1,567
Malak, NT	10.1	$450,000	$ 2,460	$ 210
Davoren Park, SA	27.0	$188,750	$ 2,369	$ 1,425
Smithfield Plains, SA	28.2	$199,500	$ 2,219	$ 1,257
Elizabeth North, SA	26.1	$197,750	$ 2,089	$ 1,110
Elizabeth East, SA	22.7	$210,000	$ 1,958	$ 908
Russell Island, Qld	41.2	$190,000	$ 1,880	$ 930
Wagaman, NT	10.2	$490,000	$ 1,738	$ 712
Blackstone, Qld	28.0	$301,000	$ 1,612	$ 107
Gailes, Qld	19.4	$250,000	$ 1,456
Virginia, NT	22.7	$630,000	$ 1,409	$ 1,741
Hackham West, SA	23.7	$261,500	$ 1,216	($ 92)
Brookdale, WA	27.5	$258,000	$ 917	($ 373)
Hillman, WA	37.7	$278,000	$ 117	($ 1,273)
Dayton, WA	15.1	$432,500	$ 86	($ 2,077)
Gilmore, ACT	15.5	$545,000	($ 22)	($ 2,747)
Medina, WA	31.5	$238,000	($ 40)	($ 1,230)
Gowrie, ACT	14.9	$576,500	($ 404)	($ 3,287)
Richardson, ACT	16.6	$495,000	($ 438)	($ 2,913)
Armadale, WA	25.7	$250,000	($ 520)	($ 1,770)
Charnwood, ACT	12.2	$460,000	($ 575)	($ 2,875)
Calwell, ACT	18.0	$550,000	($ 881)	($ 3,631)
Millgrove, Vic	61.7	$365,000	($ 1,826)	($ 3,651)
Rockbank, Vic	27.9	$505,000	($ 2,375)	($ 4,900)
Kurunjang, Vic	36.9	$388,750	($ 2,996)	($ 4,939)
Lake Munmorah, NSW	82.1	$490,000	($ 3,093)	($ 5,543)
Watanobbi, NSW	68.8	$495,000	($ 3,293)	($ 5,768)
Mannering Park, NSW	85.2	$480,000	($ 3,681)	($ 6,081)
Kanwal, NSW	69.4	$495,000	($ 3,732)	($ 6,207)
San Remo, NSW	77.4	$465,000	($ 3,740)	($ 6,065)
Melton South, Vic	36.4	$398,000	($ 3,915)	($ 5,905)
Warburton, VIC	64.7	$423,500	($ 3,946)	($ 6,064)

These calculations are based on median house values and median rents as at May 2018, with annual holding costs based on four weeks vacancy a year, 4.5 per cent loan interest and general provisions for property management fees, council rates, maintenance and insurance.

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