Top holiday investments revealed

by AB25 Feb 2014
Brokers in holiday hotspots could reap rewards from investor clients, as a new survey has revealed the most popular investment spots for holiday houses.

Comparison website compiled the list of top 10 holiday destinations ranked by highest rental yield.

The list showed dramatic differences between potential investment returns for houses and units, Finder’s money expert Michelle Hutchison said.

“It was interesting tosee the list of holiday hot spots from a property investment point of view. Just because it’s the most popular holiday destination in Australia, it doesn’t mean it will necessarily give you the best return.

“For instance, we found Hobart city to be the best value holiday hotspot to buy a house, but it came lowest on the list for units.

“The most popular holiday destination was Sydney, but it holds one of the worst performing rental yields for houses and mid-range for units. You could potentially buy three houses in Hobart with a fair amount left over and earn $1,290 per week in total, as opposed to one house in Sydney earning $1,190 per week – a difference of $5,200 per year.”

Melbourne was the second most popular holiday hotspot but consistently lags behind with its rental yield, placing last with houses and second last with units, said Hutchinson. “It seems to be the least investor-friendly of these holiday hotspots.”

Surfer’s Paradise is a “mixed bag”, placing second-to-last for yield rates in the housing market, but second for unit prices, said Hutchinson.

Hobart city held the top spot for houses, with rental yields of 4.75%, closely followed by Byron Bay with 4.7%. Hobart also has the lowest median house price on the list of $483,000, making it the most affordable location to invest. Its median house price is $218,000 lower than the second-best yield holiday destination, Byron Bay, according to Finder.

Melbourne city has the worst return for houses on the list, with a yield of only 3.07% – 1.68 percentage points less than Hobart and 0.35 percentage points less than second lowest on the list, Surfer’s Paradise.

Although Sydney city has the highest rent prices, it also has the highest property prices, almost double (96%) the second-most expensive location on the list (Brisbane), placing it eighth on the list.

Port Douglas has the highest yield for units on the list, at 7.68 percent, which is 0.74 percentage points more than second on the list, Surfer’s Paradise. It also has the lowest median unit price by far, almost 40 percent less than Surfer’s Paradise and under one-third of the median price of a unit in Sydney.

While Sydney has the highest rental and median property value prices, its rental yield is much better for units than with houses, sitting at 6.22%, which places it fourth-equal with Adelaide. 

The list was compiled based on the top 10 holiday destinations (by postcode) from Tripadvisor and ranked by highest rental yield sourced from Residex.