Buying residential investment property?

The Australian residential property market proved resilient during the Global Financial Crisis, helped by the fact that Australia has a more regulated lending sector than many other countries. The good news is that strong migration, a positive birth rate, and a chronic housing shortage are all expected to continue supporting price growth in Australia, particularly in our capital cities.

If you are interested in purchasing residential investment property, like any other investment, you need to take into account future growth. This means considering how the value of your property will increase, and how attractive it will be to tenants and a future buyer.

Buying Tips

Look for proximity to schools, hospitals, shopping centres, parks, public transport, and cafes and restaurants. Detached houses tend to provide superior growth returns compared with units, due to the underlying land value. Apartments, however, often have higher income yields. An apartment in a smaller building with a good aspect, appealing floor plan, and access to parking will usually outperform an ‘off the plan’ purchase in a very large unit development. In Sydney, houses and units close to beaches have historically performed well.

If considering an investment property in a regional area, prioritise locations within 2.5 hours drive of a capital city. Also the locations should have a strong and diverse economic base and a reasonable size population or good growth prospects.

Don’t forget that an investment property provides tax advantages in the form of depreciation, with allowances differing between new and established buildings.  Quantity surveyors provide depreciation schedules that enable you to maximise allowable entitlements.

Please contact your adviser for further information if you are interested in purchasing investment property.