Cairns emerges as the state’s best unit hot spot with rental yields of 8.7 per cent in Woree, 8.5 per cent in Manuda and 8.4 per cent in Edge Hill.
IF you are looking to buy an investment property in Queensland, you need to know this.
QUEENSLAND’S unit market dominated the national top-10 rankings for rental yield, making up 40 per cent of the top listings.
Cairns has emerged as the state’s best unit hot spot with rental yields of 8.7 per cent in Woree, 8.5 per cent in Manuda and 8.4 per cent in Edge Hill.
Chinchilla, in the Darling Downs, also made the top 10 with the average rental yield for units at 8.6 per cent, according to CoreLogic RP Data figures.
Less than half the homes in Woree (44.1 per cent) were owner-occupied, according to CoreLogic RPData, and in the past 12 months 42 units sold at a median price of just $115,000.
In Manuda, where only 39.2 per cent of homes were owner-occupied, 91 units had sold at a median of $138,000. Edge Hill was not far off that price, with 33 units sold at a $155,000 median sale price.
In Chinchilla, a gas town 300km northwest of Brisbane, 66 units sold in the 12 months at a median price of $361,000 – about double that seen in the three Cairns suburbs.
According to the latest REIQ Residential Rental Survey for December 2014, rental stock was decreasing in the state as investors took advantage of good selling conditions to put properties on the market.
REIQ chief executive Antonia Mercorella said owner-occupiers were snapping up some of that stock, with the net effect being a shortage of rental supply.
“Normally when the sales market is performing strongly we see the rental market ease,” Ms Mercorella said.
“It is clear that many investors are reaping the benefits of improved property prices and selling up – something many have been waiting for since 2009.
“It’s no secret that the GFC hit many investors’ hip pockets quite hard, and for those that have been able to ride out the storm that followed, it appears that many are seizing the opportunity to achieve a return on their original investment.”
According to industry expert Michael Matusik of Matusik Property Insights, the Cairns market has “just entered into the recovery phase of the property cycle” with sales volumes rising slightly, property prices just starting to rise, rents up slightly, new housing starts beginning to rise and existing supply tight.
He warned buyers to “make sure they don’t overpay but they can miss out if they take too long”.
“Renovators need to understand the market’s limits. Overcapitalisation can be common in recovery market locations. Renters should consider buying or locking into longer lease terms,” he said.
Cairns realtor Stephen Coates, of Coates Real Estate said the inclusion of somewhat higher-end Edge Hill on the highest yield list was a surprise, but there was no doubt rental demand had rocketed in Cairns.
“There is low supply (of rental properties) because we haven’t had any development in Cairns since virtually the GFC,” Mr Coates said. “The amount of tenants looking for properties is putting pressure on. We’re at 100 per cent. We don’t have a property to rent out (as of Tuesday 5pm).
“The demand is very high for rentals and when you have low supply, it will push prices up for the foreseeable future.”
Among rental properties for sale that Mr Coates marketed this month was a four-bedroom home at 32 Sondrio St in Woree, which came with a tenant on a 12-month lease at $340 a week.
He said that property was quickly put under contract.
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Mr Matusik said the Cairns market would see weekly rents rise given low vacancy rates, and would also encounter some price growth.
He sees the Cairns property cycle peaking around mid-to-late 2016.
His tip?
“Buy an investment property that can be shared and has older resident appeal.”