Property investors should steer clear of investing in Australia’s tourist hot spots to get the most out of their investment, new research advises.
An analysis by financial comparison website finder.com.au of tripadvisor’s 2015 Traveller’s Choice Awards of the top 10 destinations in Australia found that the most popular destinations returned among the lowest yields.
Sydney, Melbourne and Brisbane all ranked as the top three holiday destinations consecutively, however, they also ranked as the three lowest yields for housing investment, achieving between 1.93-3.29% yield.
Despite Sydney holding onto its status as most popular holiday destination, finder.com.au’s analysis shows its investment potential has plummeted in the last 12 months. Sydney is now the lowest value for housing property investment out of the list of 10 cities, with a yield of just 1.93%, an average rent of $855 per week and median house price of $2.308 million.
Sydney also hit low on the list for unit investments, at seventh place, with a yield of 5.26%, average rent of $760 per week and median unit price of $756,000.
Even though demand is high in major cities like Sydney, Melbourne and Brisbane, rental yields are poor due to high property values outpacing rental prices.
On the flip side, Cessnock – which ranked as the 10th most popular holiday destination – topped the list for best housing investment. This is despite its yield dropping by 0.42% in the past year to 5.89%. With a median house price of $269,000 it is the cheapest housing market of the top 10 destinations. Its average rent is $305 per week.
Port Douglas topped the list for units with the highest yield of 7.45% as well as the lowest median unit price of $204,000 and average rent per week $290.