Where investors are looking to buy this Spring

Scott Kuru November 14, 2024 5 min read

KEY POINTS

Queensland and Greater Melbourne suburbs are top choices for property investors this spring, says REA Group
Melbourne first-home buyers focus on outer western suburbs for houses, while Sydney buyers prefer apartments
House buyers are open to areas farther from city centres, but apartment seekers want closer CBD locations

New data from REA Group’s PropTrack shows suburbs in Queensland and Greater Melbourne are overwhelmingly the top destinations for investors looking to buy property this Spring.

Melbourne’s outer western suburbs also score highly with first-home buyers looking for houses, while the data shows that most first-home buyers in Sydney are looking at apartment markets because of the sheer cost of houses in the Harbour City.

The PropTrack rankings are based on search data from Australia’s largest property website - realestate.com.au - which is also owned by REA Group.

The details

Most of the top areas investors are targeting this Spring are affordable suburbs where houses are still available in the $600,000 to $700,000 range.

That’s well below PropTrack’s estimated median value of Australian homes (houses, apartments and townhouses combined), which was $797,000 at the end of October 2024.

With REA Group estimating Australian median rents at around $610 a week, that means many of these still affordable suburbs are offering gross rental yields in excess of 4%.

For example, REA Group says median rents in Wollert on Melbourne’s northern outskirts are $570 a week.

With a house median sale price of $683,000, that equates to a median gross rental yield of 4.34%.

“Tarneit in VIC, Greenbank in QLD, and Point Cook in VIC are equally popular with both investors and first-home buyers, indicating a shared recognition of affordability hotspots,” says PropTrack Senior Data Analyst Karen Dellow.

The exceptions in the affordability stakes are Battery Hill on Queensland’s Sunshine Coast, Pimpama - located between the Gold Coast and Brisbane - and the Blacktown area of Sydney.

With Battery Hill and Pimpama located close to tourist hotspots (Battery Hill is a suburb of Caloundra on the Sunshine Coast, while Pimpama is near tourist parks like MovieWorld and DreamWorld), it’s probable that investors are looking at these areas to purchase homes to be used as AirBnB’s or offered on other short stay platforms.

Despite its hefty median price tag of $1,005,000, Blacktown remains one of the most affordable places in the Sydney basin to purchase a house.

Top suburb searches by investors looking for units tend to focus around city centres.

Melbourne CBD topped the list, with nearby Southbank and Carlton, just north of the CBD, in the Top ten.

All three destinations are popular with students, and PropTrack says these three suburbs provide exceptional gross rental yields of 6.9% (Melbourne), 4.9% (Southbank) and 7.5% (Carlton).

Surfers Paradise - right in the heart of Gold Coast City - is popular with tourists, suggesting these potential buyers may be interested in investing in short-stay rentals.

Brisbane City and nearby Fortitude Valley are also popular with students in the Queensland capital, while 5th placed Parramatta is often referred to as “Sydney’s 2nd CBD”.

Investors “favour inner-city suburbs, including Sydney CBD, where the median price is above the one million dollar mark,” PropTrack’s Karen Dellow says.

However, most of the suburbs in the Top Ten list for investor unit searches are in the $500,000 to $650,000 range.

First-Home buyers

Affordability is also at the top of the list when it comes to first-home buyers.

“The leading suburb for first-home buyers searching for houses is Tarneit, located 30 kilometres from Melbourne's CBD in the western suburbs,” says PropTrack analyst Karen Dellow.

“Venturing this far is necessary to secure reasonably priced homes.”

Ms Dellow says Tarneit, with its median house price of $650,000, “is a stark contrast to the inner Melbourne suburbs”, where the median price for a modest two-bedroom house exceeds one million dollars.

This makes “the outer suburbs particularly attractive to first-home buyers,” she says.

PropTrack says other Melbourne suburbs popular with first-home buyers include Point Cook, Truganina, Werribee, and Hoppers Crossing, all in the city’s outer west and with median prices in the $600,000 to $750,000 range.

Greenbank, in Logan in Brisbane’s south, also ranks high on PropTrack’s list.

The median house price there is $837,000, making it more expensive than the top Melbourne suburbs but still cheaper than Brisbane's inner areas, where house prices have soared since the onset of Covid four and a half years ago.

PropTrack highlights the fact that there is only one Sydney suburb in the top ten search list for first home-buyers.

That’s Marsden Park, located 50 kilometres northwest of Sydney's CBD.

“With a median house price of $985,000, Marsden Park remains relatively affordable for first-home buyers in Sydney, where budget-friendly options are scarce,” Karen Dellow says.

It’s a different story when it comes to unit market searches by first-home buyers.

Eight of the top ten suburbs are in Greater Sydney.

“For many in Sydney, buying a unit is the more viable option, as it requires a smaller deposit and fits within government incentive limits that often exclude house purchases due to their price,” Karen Dellow says.

The take-out

Overall, this Spring, “affordability is a prime concern for both investors and first-home buyers,” PropTrack Senior Analyst Karen Dellow concludes.

“Those seeking houses are willing to look farther from the city where land is cheaper, while those wanting proximity to the vibrant inner city and investors aiming for low-maintenance, rentable properties prefer (apartments in) closer suburbs.”