Where to invest now to make $1m in 10 years
Finance savvy Millennials facing some of the toughest conditions in generations have become millionaires working the system to find the best suburbs to make money off the property market.
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Financially savvy Millennials facing some of the toughest conditions in generations have become millionaires working the system to find the best suburbs to make money off the property market.
And now, new data from PropTrack has uncovered suburbs where Millennials can invest to make money now – using rents to pay off more than their mortgage repayments – but also where they too can become millionaires inside a decade.
Millennials – those currently aged between 26 and 42 – like Dilleen Property’s Eddie Dilleen who has amassed 75 properties and InvestorKit’s Arjun Paliwal who has 17 in his portfolio –are among those who’ve become property millionaires starting with zero assets and no inherited real estate.
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Market analyst Pete Wargent, co-founder of BuyersBuyers, said it is possible for the average investor to become a million dollars richer within a decade through property.
“It depends on their circumstances, income, and borrowing capacity, but yes,” he said. “Even with a couple of investment properties this can often be achieved.”
Both Mr Dilleen and Mr Paliwal agree. “Absolutely,” Mr Dilleen said, “it is possible for the average investor to do that in two years even, depending on what you view as the average investor.”
“I’d be reaching out to a mortgage broker right away to find out their borrowing capacity especially if you’re a Millennial and you might be starting a family. It’s extremely important not to put it off.”
PropTrack economist Angus Moore said if trends over the past decade were repeated, there were several suburbs where it was possible to make $1m or more in capital gains given how median prices had doubled and even tripled there.
“We’ve seen extremely quick growth in property prices, particularly in the last three years. To put it in context, 2021 was the third fastest year of growth in 140 years.”
While that was “probably unlikely” to be repeated nationwide any time soon, Mr Moore said “there are certainly places that will see strong growth in the next 10 years”.
The Gold Coast’s Palm Beach, Coolum Beach on the Sunshine Coast, Moss Vale and Bowral in the NSW Southern Highlands saw medians surge over 200 per cent in the past 10 years, he said, while Rye and Blairgowrie in Melbourne were close to the pace (182 and 197 per cent), and Greater Adelaide’s Prospect and Parafield Gardens doubled (98 per cent).
Mr Moore said Millennials were often held back by their deposits, which currently took six to seven years to save for a median priced home, compared to 1990 when deposits took just three years to save up.
“Homeownership rates among 24 to 35 year olds are lower than they were a few decades ago, which means Millennials will have a different experience from their parents. They’ll be buying at a later point in life. They’ll be carrying debt later. So they won’t be mortgage free as early as perhaps their parents were.”
First home builder specialists First-Place managing director Daniel Senia said property prices and interest rate rises saw Millennial FHBs decline by 7 per cent in the past year.
“We’ve completely lost that 18-to-24-year-old buyer was about 6 per cent of our market last year, it’s down to zero this year,” he said. “What we’re finding is that it’s taking longer to get into the market and these buyers are getting older. Where it used to be FHBs at mid to late 20s, we’re now seeing them in further stages of life development, in their mid to late 30s, with children, they’re renting longer, it’s taking them longer to save the deposit.”
Mr Dilleen said it was time for a mindset shift among Millennials to tap into the market sooner. “You don’t have to put down 20 per cent (deposit). You might find an investment property – rather than trying to save up to buy a million dollar property right away, you might buy one for $300,000 just to get started.”
“For people wanting to do it today, you can still get in with a 10 per cent deposit right now – ANZ will actually allow investors to do 95 per cent loans. I know people that have recently bought a property for $300,000 and 5 per cent (deposit) is $16,000. You can do that today. It’s still achievable for anyone working at McDonald’s or on a lower income to do that. It just takes a different mindset.”
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PropTrack data shows several suburbs across major capitals logging gross rental returns over $600 a month (median rent minus monthly mortgage repayments) including three in Darwin (Darwin City, Zuccoli, Bakewell), Gordon in Canberra, and Caulfield East in Melbourne.
In five Adelaide suburbs, gross rental returns were above $250 a week (Smithfield Plains, Kurralta Park, Salisbury, Walkerville, New Port), while Brisbane has 10 at that level rising to as much as $420 a month for investors (Woodridge, Kingston, Slacks Creek, Mount Warren Park, Bethania, Eagleby, Logan Central, Brisbane City, Waterford West, Spring Hill).
The only dark spot was for Sydney buyers, who were forced to look further afield to other capitals or regions for such positive rental returns, according to PropTrack figures – something which is likely to keep interstate buying firing for years.
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