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Love where you live but can’t afford to buy property there? New research has identified the best Brisbane suburbs to “rentvest”.
Rentvesting is a strategy gaining traction with buyers who want to buy property but cannot afford to purchase where they live, so they instead invest in growth markets, often in regional centres, while continuing to rent and live in desirable lifestyle locations close to work, family and friends.
While the concept is particularly pertinent for buyers in vastly unaffordable cities like Sydney, there is plenty of scope for buyers struggling to get into the Brisbane market too, says property researcher Jeremy Sheppard.
“The whole idea is that wherever you live in Australia, if you’re struggling to get into the market, you have to be realistic and choose a location that isn’t necessarily attractive for you to live in, but somewhere you can afford that with still have good capital growth,” he said.
“It’s still a very under-utilised strategy. People think it’s a case of rent money is dead money – but this a case for why it actually works.”
Property research research site LocationScore.com.au found units at Rochedale South, Arana Hills and Banksia Beach rated highly for their affordable median prices, rental yields and potential capital growth, while houses in Bray Park and Strathpine also rated well.
“These are affordable markets with good growth prospects that renters with some kind of deposit can buy into to get on to the property train,” Mr Sheppard said.
“By using this research as a starting point, people with lower incomes who choose to rentvest can identify properties that will help them get ahead of those who already own homes in expensive markets.”
LocationScore’s also included the top five Brisbane suburbs that are cheap to rent in despite their blue chip status.
Houses at Woolloongabba, Lutwyche, Morningside and Cannon Hill rated highly for rentvestors as somewhere to live and rent because of their low-yield, low-growth but high quality lifestyle where renters pay less per week than owner residents to enjoy the same facilities.
“Renters in Woolloongabba are moments from the CBD and living in one of the most exciting urban gentrification zones there is,” Mr Sheppard said.
“And with an abundance of accommodation options, there’s competition to attract tenants which is keeping rent prices reasonable.”
Among the results, Mr Sheppard did identify an anomaly however. “While the data suggests Park Ridge has all the makings of a family friendly suburb where tenants are the winners, a large number of development site purchases do skew its median price,” he said.
“An area more appropriate for rentvestors to live in would be Lutwyche located five kilometres north of Brisbane’s CBD.
“Apart from comprehensive shopping and transport links via the busway and tunnels, the suburb is seeing growth in its cafes and retail facilities, particularly around its shopping centre.
“With houses priced around $785,000 returning just over three per cent, renters are certainly getting the better end of the deal in this address,” he said.
“Rentvestors do better by investing in locations like Rochedale South, with units priced at just under $300,000 returning more than 5.7 per cent.”
“Likewise, Arana Hills to the north offers all those great suburban facilities including excellent schools and retail, that will help drive its property prices up.”
LocationScore’s analysis showed units in Arana Hills are priced around $370,000 and are returning 5.15 per cent.
“As a growth zone this makes for a very attractive prospect,” he said.