Up until recently Sydney investors were rarely seen on the real estate hustings in Perth or Brisbane. But all that has changed.
Agents in these cities are now reporting a spike in interest from Sydneysiders looking to cash in on some of the best investment conditions in the country.
In Perth, a continuing influx of workers to fill mining-related jobs, and a shortage of dwellings in both cities, has forced up rents and, combined with relatively stable prices, pushed yields higher than most other Australian cities.
Both cities now have the highest gross rental yields for houses of all major capitals (5.3 per cent), while Perth is the best performer for units (5.8 per cent), according to Fairfax Media-owned Australian Property Monitors (APM).
Rents in Perth and Brisbane also rose strongly in the December quarter, while most other capitals had a flat rental market, APM found.
In Brisbane, the managing director of residential projects for CBRE, Paul Barratt, said Sydney investors began to show interest early last year and their numbers have increased four-fold since.
So much so that when a new 191-apartment project in South Brisbane goes on sale in March, CBRE will have a display set up in Sydney targeting investors on the back of increased interest.
Vacancy rates in South Brisbane were running about 0.7 per cent, which was forcing up rents, and creating the conditions for ”really good” yields, he said. These conditions would last while there was an undersupply of dwellings.
”All our projects have got Sydney buyers in them at the moment,” Mr Barratt said. ”This will keep going until more apartments come on [the market].”
Two years ago all of Damian Collins’s clients were local investors. Now, close to 20 per cent are from interstate, especially Sydney.
Such is their interest that for the past 18 months the managing director of Momentum Wealth, a Perth-based property investment company, and his colleagues have regularly held seminars in Sydney for prospective buyers.
”We are seeing a lot of people looking into the Perth market,” he said. ”Sydney people are astounded at what you can get.”
At the moment, $500,000 would buy a three-bedroom, two-bathroom house 7 kilometres from the city, he said. ”In Sydney, you wouldn’t have a hope of getting a unit for that.”
Liz Germani, from Kellyville, is one of these investors. Last year, she bought a new two-storey house in Cloverdale, about 9 kilometres east of Perth, for $442,000 and is renting it for $495 a week – a yield of 5.8 per cent.
In that time, the value of the house had increased about $100,000, Ms Germani said, and the rent had also gone up.
Mr Collins, who manages it for her, expected the rent to go up again to $520 at the next review ”but possibly more as vacancies are still low and demand is still high”.
Ms Germani, who also owns an investment house in Sydney’s Glenwood, said her decision to invest there was ”a good story so far. I got better value going to Perth,” she said.
Antony Lawes – February 3, 2013
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