Which Suburbs Are Best For Property Investors?

Generous tax concessions and a widespread belief that investing in property is the safest choice mean that owning a rental property is a popular choice for Australians. But where should you buy a house to get the best returns?

Picture by Nadia308

In its February issue, Smart Property Investment identifies the 50 suburbs which it says offer the best returns for investors in Australia. More than a third of the identified suburbs in its Fast 50 list are located in NSW. At the other end of the spectrum, nowhere in Tasmania or the Northern Territory made the list. Factors considered by the magazine included population, income levels, current rents and potential for future growth.

Here's the full list, sorted by state:

NSW Bathurst Blacktown Goulburn Gunnedah Lapstone Liverpool Moree Mudgee Muswellbrook Neutral Bay Penrith Pyrmont Richmond Rosemeadow San Remo Seven Hills Thornleigh Wickham

QLD Bowen Chinchilla Dysart Emerald Gladstone Moranbah Oakey Rockhampton Roma Toowoomba Woolloongabba

WA Como Dampier Fremantle Greenfields Halls Head Leederville Murdoch Newman Port Hedland South Hedland

VIC Corio Frankston Morwell Warrnambool

SA Aldinga Beach Hackham Port Adelaide Port Augusta Seaford Whyalla

ACT Canberra

The magazine's editor Phillip Tarrant notes that having the right suburb is only the start of the process:

Capital growth is no longer a given when it comes to investing in real estate, but that's not to say it's not achievable either. We're moving into a new era for property in Australia and investors will need to do their homework and buy strategically in order to secure the best returns.

While there are frequent suggestions that Australians should take a broader approach to investment, property remains a popular choice because of negative gearing rules. According to the Australian Bureau of Statistics, 21 per cent of Australians have a second property. Got your own view on investing in any of the suburbs on the list? Share your thoughts in the comments.

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


Comments

    What ... Tasmania isn't a State of Australia now? /hurt feelings

      Didn't have any on the list either (but I feel bad because I didn't notice). Story updated to reflect that.

      Don't be silly, Tasmania is part of New Zealand.

    QLD areas listed should be viewed cautiously except for maybe the 'Gabba. The growth in all other areas are inflated due to the mining and gas boom in regional areas. If there is any drop in those industries, prices will most likely not be sustainable as long term investments.

      Same with WA. A lot of mining towns. I'd hate to see property prices if the mining companies pull out.

      same with some of the NSW ones.
      I currently have my IP in muswellbrook, which has been giving high returns for a few years now... as of last year it has been positive geared.

    The best placein the ACT to in vest is..Canberra? As opposed to what....Namadji State Forest?

      Exactly: I mean, I know Canberra isn't a big city, but in terms of real estate there are many different areas that have different returns and have a huge variance in price.

      Canberra real estate is usually seen as a solid investment because of the stable (public service) workforce that is more or less immune to the international and national economy. Saying that, public service job cuts has a direct impact of the housing market in the ACT.

    If you don't live in or near these areas remember you've got maintenance fees etc to pay out etc. Property isn't a great investment class anymore. And before anyone chips in with they bought a house last year and it's doubled in value, that's exactly why it's no longer a good asset class. At 9xmedian income the upside in value (when inflation is taken into account) is low (houses will not double and get to 18x median salary anytime soon - which bank wold lend at those multiples??). Rental income returns are pitiiful and people over-estimate the impact of negative gearing.

    I wish people would give less sway to these kinds of articles which are just trying to prop up a flailing sector. If you must invest in property, take advantage of the Aussie dollar and buy overseas. London is cheaper than Geelong...

      You're joking right? Property is pretty much the only safe investment for your money nowadays. Assuming you have a stable income and have bought in a reputable area (ie. not Frankston) you should have no trouble getting income return by renting it out, which helps negative gearing. You could pay of a <500k house in 5-7 years if you're smart.

      And give me a break about "maintenance fees"... they'd amount to little less than a couple thousand a year, if that. Hardly a deal breaker.

        No I'm not joking. Based on current prices Aussie property is not a good investment. The fact that people need negative gearing (which means the income isn't even paying the outgoings - the text book definition of a liability, not an asset) should be an indication. The current high-yielding corporate bonds would be a wiser choice if you want 'safe'. Or overseas property if you want to leverage the present strength in the AUD and the 'psot-crash' prices available in some countries. I'm not saying property is always bad, and it has been great but it presently isn't if you actually crunch the numbers and compare with what else you could be doing (if you know about different asset classes that is).

        If you can afford 100k a year (after tax) to pay off a 500k mortgage in 5-7 years then that's one hell of an investment fund you could have if your wanted to.

          2-3% rental returns, vacancy rates increasing because of oversupply, and falling house prices does not sound like a 'safe' investment when you can still get 6% from a bank.

    "ACT - Canberra"... good reporting.... you do realise canberra isn't an actual suburb right?

    My home town of Goulburn is on the list! :)
    Nothing says "great investment" like a giant merino (that walks down the road to a more prominent place...) and a high-security gaol :P

      I used to live there too! Goulburn public school. *shudder*

    ACT: Canberra

    Oh really?! Wouldn't want to narrow it down!

      I think it means that anywhere in Canberra Metro area, there is a fair bit of the ACT apart from canberra (though nothing much there)

    Shelter is an expense, not an investment. All capital gains are off the back of increased credit supply which is due to contract. Sorry guys this article is all BS.

    The correct answer is "none. The crash has barely started, and prices will fall another 30% to 40% before the yields make buying worthwhile".

    You're welcome.

    Fvck investors - they've made the market impossible for people who actually want to buy a place to live in.

      Its not just Australian investors.
      People who are not citizens nor permanent residents of Australia are allowed to buy investment property here. That's another reason you can't afford to buy.
      In this matter, governments on both sides of politics have shown criminal neglect when it comes to looking after their own people.

    Property is the best investment with great returns. I've made loads of money and have my properties around the country. Those who say it's not a good investment are just sore losers, you got in too late or not at all. I'm riding on the pigs back!

      Hi hungrymofo,
      Can you please suggest us what are the best areas in NSW to invest as per your analysis and experience? Above list does not sounds good for me. In NSW my idea is Liverpool, Bankstown, Blacktown. Do you think the same?

    If you’re looking to buy an investment property, an option could also be to look at regional areas where house prices are considerably cheaper, although you might need to do some renovations.

    We’ve written a great article on Australia’s property growth markets – have a read if you’re interested! http://bit.ly/M5jhqK

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