Property investors should look beyond the beaten path when buying an investment property, with new research finding that popular tourist hubs don’t necessarily return the best rental yields or capital growth.
According to the research conducted by comparison website finder.com.au, those buzzing hot spots you’d expect to be safe investment bets don’t guarantee healthy returns due to their already inflated price tag.
In New South Wales, the research revealed, Sydney’s CBD recorded the lowest house rental yield. The best house rental yield was recorded by the state’s fourth most-visited destination – Cessnock, located in the Hunter region north of Sydney.
The median house price in Sydney is $1.8 million and returns an average rental yield of 2.9%. In contrast, Cessnock’s median house price is $260,000 and investors can expect an average rental yield of 6.15%.
The highest three-year capital growth for houses was Adelaide’s CBD at 31.39% with a median house price of $536,500. Alice Springs had the highest rental yield for houses at 7.49%, with a median house price of $404,500.
Michelle Hutchison, money expert at finder.com.au, says the research shows that “there’s a big difference between the costs and projected returns” for the top tourist areas of Australia. Just because the area is a popular doesn't mean it's going to give you the best return.