Strong price increases in the property market over the past year means investors would now require higher budgets to secure a strategic real estate investment, a Sydney buyers’ agent said as he identified five affordable investment house locations.
Ben Plohl (pictured), BFP Property Buyers founder and principal, said investors could buy a house in a strategic growth market for about $500,000 before the pandemic, but those days were now mostly over.
“Savvy investors have been adopting a nationwide approach to their portfolios for a while now, which meant they could use equity from more expensive markets to purchase in more affordable locations,” Plohl said. “However, with property prices now about 20% or more higher than they were two years ago, investors need to spend more to achieve the same result. It must be said, though, existing property owners prior to the pandemic have recorded strong price growth in their own homes as well, which they can leverage into investment properties elsewhere.”
In 2020, Plohl identified Kippa-Ring, Bracken Ridge, and Wynnum West in Greater Brisbane, Bateau Bay on the NSW Central Coast, and Maryland in Newcastle as the five strategic investment locations for investors with a $500,000 budget, but prices in these locations have surged between 49% and 89% since that time.
CoreLogic data showed the national median house value is now $728,000 – a figure Plohl said is the new “affordable house price” benchmark now.
“To ensure that investors are purchasing properties with a superior growth forecast, it’s vital that they recognise that buy-in prices have changed,” Plohl said. “Rather than blindly try to find a house for $500,000 – like they could two years ago – they need to be realistic about market conditions as well as selective about the best locations to invest their money.”
The five locations Plohl said investors should consider included Albury-Wodonga (NSW/Vic), the City of Onkaparinga (SA), Tamworth and Wagga Wagga (NSW) and Toowoomba (Qld).
“Each of these locations appear to have strong market and economic fundamentals which generally underpin property price performance over the medium-term,” he said. “That said, investors need to complete the necessary due diligence to ensure they are purchasing the best house in the best location and ensure they are working with experts who have experience purchasing in these areas.”
