Symond urges investors in wake of 16.9% rental yield, broker not so sure

by Mackenzie McCarty19 Mar 2013

For many years, property investment has been seen as the domain of the wealthy investor with cash to spare, but that’s starting to change, says Aussie Home Loans executive chairman, John Symond.

After reviewing suburb statistics commissioned from RPData, Symond says there are at least half a dozen suburbs in each capital city where gross rental yields are greater than the cost to repay the mortgage and, in some cases, where rent is increasing year-on-year.

“It’s the perfect time for the average Australian to consider a move into property investment if they have some money saved. Both fixed rates and variable rates are the lowest they have been in years, with interest rates below 5%.”

Housing prices in some areas are historically low, according to the research, but are starting to move back up and Symond claims investors can earn rental yields of between 5 and 10% in some areas and as high as a 16%  in Bellamack, Darwin.

However, Northern Territories broker franchise principle, Tony Schelling, says he’s concerned the data may be slightly skewed.

"Bellamack has had some pretty new homes, so 16.9% -you’d have to have very, very low cost housing. The average house in the area is probably $600,000 and they’re getting about $1,000 per week for rent. I think the figure does seem a little high.”

Schelling says he doesn’t want to question RPData, but says it’s possible for figures to occasionally become ‘adjusted’ by limited sales.  

That said, he largely agrees with Symond, saying local rental yields are high (though he estimates the figures to be more around 6-10%), especially for unit investments.

“John is right, Darwin in particular has opportunities for those who have a focus on investment and unlike towns like Gladstone in Queensland, which also have high rental yields, they have single stream economies. Darwin has a multi-stream economy…and has very solid long-time prospects.”

Symond says properties with high rental yields are of benefit to investors who have less disposable income that they can use to pay the property’s bills.

“Every day Australians can seriously consider moving into the investment property market and having the rent cover the mortgage. In effect they could ‘set and forget’ an investment plan for their future.”

COMMENTS

  • by Mike C 19/03/2013 10:19:35 AM

    Well of course Symonds is going to talk up 'property investment' . Its in his best interest to do so. However its not unlike the issue surrounding SMSF borrowing, investors simply need to remember the key word....DI-VERS-IF-ICATION! (by the way I'm a broker not a planner)

  • by Brisbane Broker 19/03/2013 11:01:02 AM

    Mike,

    DI-VERS-IF-ICATION is; we all make money BUT client does not.


    I'm a planner.

  • by Mike C 19/03/2013 11:54:42 AM

    Sometimes clients dont make money because of 'white shoe brigade' property investment schemes as well!