For investors, it looks almost an idyllic option … until some of the country’s fastest-rising property prices are also factored in.
But the strong rates of price growth could be off-putting. It might be a good idea to look further afield where homes aren’t quite so expensive and driving down rental yields.
The latest Domain report on rents in Victoria shows strong increases in some of the most sought-after seaside spots.
Portsea, for instance, has seen an annual change in the median weekly asking house rent of an astounding 35.7 per cent to $950, although the median gross rental yield sits at just 2.51 per cent.
Peninsula partner, Sorrento, performed strongly too, with a 23.6 per cent rise in the median rent to $680 but a marginally better yield at 2.77 per cent.
“It’s what we call globally a very ‘thin’ market, that’s one where there’s not much of it, it’s a limited resource, so it will only become more precious over time.”
“It has an exceptionally beautiful beach, parks, little hamlets, and you feel like you’re on a little island and that you’ve escaped from the world. And rents will keep on going up. At the moment, we have renters lining up on the street trying to outbid each other.”
Generally, however, whether to invest in a Victorian coastal town depends very much on the property purchaser’s endgame.
If they’re planning to invest and later move there for lifestyle, then that “pleasure investing” could well justify the expense of the initial purchase.
It then becomes a lifestyle asset, so it doesn’t matter so much if the aggregate of financial returns is unpredictable. You’d still want to make a very careful check of what people are willing to pay in rent, though, because you don’t want fees, insurance, repairs, maintenance, and depreciation to take the net rent down to zero.
Victoria’s southeast is a great long-term investment.
Rents for houses in Rosebud have risen a respectable amount over the past year, but the yield was significantly higher.
Rosebud, Capel Sound and Tootgarook are the town’s favourite with a lot of investors.
We’re completely surrounded by the coast, bush, resturants and wineries and I think it’s still currently a little bit undiscovered.
Rents are on the way up over the past year and it could be an excellent investment.
The area is taking off now, and it’s catch-up time.
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