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Which Sydney Suburbs Offer The Best Rental Returns For Property Investors In 2018?

Which Sydney Suburbs Offer The Best Rental Returns For Property Investors In 2018?

Last year (2017) saw the Sydney property market finally start to slow down however rental demand is still relatively good. The reason for this is that with the lack of affordability to buy, many more people are forced to find rental accommodation.

This is relatively good news for property investors looking for positively geared properties and who can afford to purchase an investment property at current prices. And it seems that property prices are currently not predicted to fall.   However if there is an interest rate rise this year, this could affect property prices marginally.

So where should you look at if you’re keen to purchase an investment property in Sydney and its surrounds? Always remember one of the top rules in investment property location – the property should be close to public transport and other necessary infrastructure.

Sydney’s Western Suburbs

Suburbs in Sydney’s west like Parramatta, Blacktown and Liverpool are all good locations for investment properties thanks to the growing infrastructure and relative affordability.  There’s a new airport planned at Badgery’s Creek which is set to open in 2026. This means that demand for properties in the Liverpool area will increase over the coming years.

It could also mean an increased demand for rental properties in the area especially during the construction phases.

Let’s have a look at these areas in more detail.

Parramatta

Parramatta has a population of 18,446 and the median price for a house is $1,302,500 with an average weekly rent of $520. Units, on the other hand, have a median price of $657,000 with a weekly rent of $480.

Properties in this suburb comprise mostly of units, flats and apartments (72.3%) with only 17.4% of properties being houses and 9.1% of properties being semi detached dwellings. Rentals comprise 49% of all dwellings in Parramatta.
Interestingly the median growth for property prices for houses over the past 12 months was 26.33% but for units, it was only 2.98% and this has declined even further in the last quarter.

Blacktown

Blacktown has a population of around 38,911 and is 34km from the central Sydney business district. It has good public transport infrastructure being on a major train line. Median property prices range from $740,500 for houses to $540,000 for units making it slightly more affordable than it’s neighbouring suburb of Parramatta. Rents are also more affordable with an average weekly rent of $440 for a house to $405 for a unit.

Properties in Blacktown comprise of 74% houses, 12.8% semi detached dwellings and 12.7% units. Rentals make up 29.7% of all properties in this area.

Over the past 12 months, median property prices have grown by 6.93% for houses and 11.11% for units however this growth has dropped significantly over the past 3 months.

Liverpool

Liverpool is situated just 32 km from Sydney’s CBD and is one of Australia’s oldest towns with many heritage listed buildings dating back to the 1800s. It currently has a population of around 21,316.

Median prices for houses currently sit at around $800,000 with an average weekly rental return of $460 while units are priced at $480,000 with a weekly rental of $382.50. Over half of all properties in Liverpool are units (51.3%) while 37.8% are houses and 10.3% are semi detached dwellings. A large 42.5% of all properties are rentals.

In the past twelve months houses have achieved a median growth of 6.67% and units have grown by 9.67%. Once again, this has significantly reduced in the last 3 months, although units are still growing at 2.13%.

Sydney’s Eastern Suburbs

Suburbs to watch out for in Sydney’s east include Surry Hills, Kensington, Randwick and Kingsford due to the light rail line which links the University of NSW with Sydney’s CBD.

Let’s look at one of these in more detail.

Kensington

Kensington has a population of 10,845 and is adjacent to the Royal Randwick Racecourse. Due to it’s location, property prices are fairly high with the median price of houses being around $2,765,000 and units at around $915,500. Average weekly rents for houses are $1050 and units around $600.

Despite the high property prices, Kensington has achieved good property growth with house prices growing by 18.92% and units by 11.99% over the past 12 months.

Over half the properties in Kensington are units (58.3%), while 35.3% are houses and only 5.2% are semi detached dwellings. Rentals make up 44.7% of all properties in this suburb.

Sydney’s Inner West

Suburbs in Sydney’s inner west such as Camperdown, Petersham, Stanmore and Croydon Park are also proving to be quite popular with both families and professional singles.

Let’s look at Croydon Park as an example.

Croydon Park

Croydon Park currently has a population of around 10,458. The median house price in this suburb is $1,515,000 with an average weekly rent of $645 while units are around $669,000 with a weekly rent of $430.

Properties in this suburb consist of houses (58.9%), units (27.8%) and semi detached dwellings (12.6%).  Only 27.1% of all properties are rentals.

Over the past twelve months, properties in Croydon Park have achieved good growth with houses at 19.03% and units even better at 21.64%. Like most Sydney suburbs mentioned however, growth has dropped significantly over the past 3 months.

If you’re looking for more affordable investments property options however, you should consider regional areas such as the Central Coast, Newcastle and Wollongong. The median price of units in Newcastle West, Wollongong and Shellharbour is around $500,000 to $550,000 with average weekly rents of around $400 to $430. In fact, in North Wollongong median unit prices rose by 21.39% in the past twelve month.

We may look at these regional areas in more detail in future articles.

Links:

Image 1: https://pixabay.com/en/sydney-…

Graph 1: https://www.smartpropertyinvestment.com.au/data/nsw/2150/parramatta

Graph 2: https://www.smartpropertyinvestment.com.au/data/nsw/2148/blacktown

Graph 3: https://www.smartpropertyinvestment.com.au/data/nsw/2170/liverpool

Graph 4: https://www.smartpropertyinvestment.com.au/data/nsw/2033/kensington

Graph 5: https://www.smartpropertyinvestment.com.au/data/nsw/2133/croydon-park

About Author

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Collins Mayaki

Collins Mayaki is the Managing Director of Wealthy You – helping Everyday people, Businesses and foreign investors navigate through the competitive and ever-changing mortgage landscape to find the right loan for them. Wealthy You goes into bat and negotiate on your behalf, making the process as simple as possible for you, geared up to deliver fast results. Our Mortgage Brokers help you avoid the pitfalls, and we'll find loan features to suit your personal circumstances. Collins has more than 12 years of sales, management and marketing experience across a diverse group of companies.

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