According to new research from The Female Investor, it is still possible for first-time buyers or investors to purchase an affordable property in many parts of the Australian nation.
Co-authors of The Female Investor – Creating Wealth, Security, and Freedom through property, Nicola McDougall and Kate Hill, found affordable rentvesting locations around the nation.
Ms Nicola McDougall, who is also the Director of Bricks & Mortar Media and a board member of the Property Investment Professionals of Australia (PIPA) offered more insights.
“The strong price growth of last year did not have to dampen the property ownership dreams of prospective property owners, because many locations continued to be affordable.”
“As well as many young people moving to more affordable areas over recent years, rentvesting has become a popular strategy for those who want to buy property but still want to remain living in an expensive real estate city such as Sydney or Melbourne.”
Ms Kate Hill, who is also a Qualified Property Investment Adviser (QPIA) and a property buyer at Adviseable, said that rentvesting was a strategy that involved purchasing property in a more affordable location and continuing to rent the property that you live in.
“Renting is more affordable than purchasing in desirable pockets of major cities, where buy-in prices can easily be millions of dollars and where many young people desire to live.”
“Being a long-term renter without putting your money to work somehow has significant ramifications on your financial future as well as potentially causing hardship in retirement.”
According to new research by the Grattan Institute, most Australians still believe that they will have their own home paid off by the time they retire, but that is no longer a certainty.
The research found that by the year 2056, the rate of homeownership for over-65s will have declined from about 76% today to about 57% and Ms McDougall said that the declining rates of homeownership may see more people spending their twilight years living in poverty.
“Young people in their 20s today may find themselves without a home to call their own in retirement, with many likely to be financially stressed if they rent, or even to suffer poverty.”
Five affordable rentvesting locations
Casey City Council (Melbourne)
Example suburb:
- Cranbourne median house price – $657,000
- Rental vacancy rate – 1%
The Victorian Government has identified several suburbs in the City of Casey to play a major role in service delivery and creating employment in its long term planning document.
“The population growth rate in the census was higher than other rapidly growing Melbourne municipalities. It’s growing at a rate more than twice the national average,” Ms Hill said.
“Local industries are diverse, which means that the area is not dependent on only one industry and thus the area is less volatile which keeps employment rates very stable.”
60% of locals live and work in the area and don’t commute into the CBD, thus an attractive lifestyle choice for families due to affordable housing compared to most of Melbourne.
“The economic fundamentals are solid with continued price growth potential. Casey City Council release land for development responsibly, and have done so to keep supply steady.”
“In spite of developments to cater for the growing population, the growth charts are steady, vacancy rates are generally low, and rents have been increasing steadily.”
Moreton Bay Regional Council (Brisbane)
Example suburb:
- Caboolture median house price – $445,000
- Rental vacancy rate – 0.7%
From surging population to myriad major infrastructure projects, including a brand new university in Petrie and the redevelopment of Caboolture Hospital, the Moreton Bay region ticks many investment fundamental boxes for new and seasoned investors, Ms McDougall said.
“A few years ago, Moreton Bay was classified as a priority growth area by the State Government, with its population predicted to hit half a million within about two decades.”
“One major project that is earmarked for the region is the development of Caboolture West, which is a growth precinct that boasts a plethora of attributes and affordable property.”
“Caboolture West will also benefit from an updated structure plan to deliver a new community, with a population similar to that of the city of Mackay. The broader Caboolture West area was also identified as a major expansion area within the South East Queensland Regional Plan.”
“Caboolture West is at the heart of a rapidly growing corridor north of Brisbane and is expected to provide about 30,000 homes for around 70,000 people and generate 23,000 jobs.”
“The area will also have access to primary and high schools plus a TAFE and a private hospital.”
City of Onkaparinga (Adelaide)
Example suburb:
- Morphett Vale median house price – $430,000
- Rental vacancy rate – 0.1%
Ms Hill said that the City of Onkaparinga has strong population growth forecasts, coupled with affordable property prices, low vacancy rates as well as access to the central city.
“The area also has an attractive seaside location, with a track record of steady price growth and above-average rental yields in one of South Australia’s strongest population growth areas.”
“Over the next 20 years, the region is expected to receive an influx of 48,000 additional residents, making it one of Adelaide’s strongest growth areas.”
“The location is ripe for rentvesters because it has lifestyle, affordability, improved transport links, economic growth drivers, population growth and proximity to major jobs nodes.”
“$1bn was spent on infrastructure, the duplication of the Southern Expressway, the McLaren Vale overpass, electrification and extension of the Noarlunga rail network to Seaford.”
“The outcome of this is excellent and easy accessibility between Adelaide and the Onkaparinga region, which also has a diverse range of industries to support the local economy.”
City of Stirling (Perth)
Example suburb:
- Mirrabooka median house price – $385,000
- Rental vacancy rate – 0.4%
Ms Mc Dougall said that the City is one of four precincts in Perth that led the recovery in the property market two years ago, following the city’s multi-year real estate downturn.
“The region offers a leisurely seaside lifestyle, being home to the Scarborough Beach, trendy bars and cafes with a youthful vibrancy to attract a steady stream of 20 to 40 year-olds.”
“Further more, in addition to the region’s appeal are the shopping and education facilities, which are coupled with good transport links to the Perth Central Business District.”
“It’s the largest local government area in Perth, the largest local government by population in Perth and the second largest employment district in Western Australia after the Perth CBD.”
“Serious development began to occur there in the 1960s and 1970s as Perth expanded.”
“The City has initiated a project to improve the suburbs of Balga, Dianella, Nollamara, Mirrabooka and Westminster, expecting revamped town centres, transport and housing.”
Penrith City Council (Sydney)
Example suburb:
- Kingswood median house price – $790,000
- Rental vacancy rate – 1%
Ms Hill said that Western Sydney is considered as Australia’s third largest economy with more than $22 billion earmarked to be spent on transport infrastructure, including ‘WestConnex’, Parramatta Light Rail, and Badgerys Creek Airport, over the next few years.
“Employment in Western Sydney is expected to grow 47% within the next 14 years. Penrith City Council and businesses are implementing plans to create 12,000 jobs by 2036.”
“The decision to build Sydney’s second airport at Badgerys Creek will also add to the strategic appeal of Penrith and has acted as a catalyst for other large-scale projects.”
“There is a $5bn Sydney Science Park and the Penrith Health and Education Precinct with trade training, a specialist science and maths high school, and a new university at North Bringelly.”
“The precinct will be part of the $10 billion ‘Aerotropolis’ economic hub, delivering jobs, homes, infrastructure, and services. The project is also expecting significant funding from the Western Sydney City Deal which is a collaboration between three levels of government.”
“In 2 years, Penrith’s property market received a ‘ripple effect’ from the growth in Sydney, with most suburbs seeing double-digit annual growth in median prices in recent years.”
Ms Hill said the area was ideal for rentvesters or homebuyers with slightly higher budgets.
“Penrith City has a robust major infrastructure program, recorded population growth every year for decades, has diverse industries that keep its economy vibrant, as well as a more affordable property market that is incredibly active for both renters and buyers.”
