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The suburbs where your property will pay for itself

suburbs, property, investments, investing

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

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. 

The suburbs where your property will pay for itself
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