Buy at the bottom Part 1: Best deals under $300k

Find the best property dealsAre you ready to shop for bargains but not sure how to tell the difference between ‘bottomed out’ and ‘down and out’?

We dig deep into the numbers and identify suburbs to watch across the country where strong fundamentals point to strong returns.

The lower band in our scan of bargain suburbs consists mainly of areas that are intriguing investors with strong rental yields, while first time homebuyers priced out of neighbouring suburbs look to them for good value combined with often exceptional CBD access.

Among the lower end, these are the ones boasting good fundamentals, coupled with strong demand and rental growth. They may have hit a rough spot lately like much of the market, but they are among the best situated to spring back to form.

New South Wales

Gateshead (houses)

Median price: $273,000
Average discount: 7%

Kickers:

  • 20 minutes to downtown Newcastle
  • Greater Hunter Valley region undergoing massive resource boom
  • Affordable, yet beach close
  • Hospital facility in town draws renters
  • Low vacancy rates at just 0.71%
  • Strong yield at 6.28%

Signs of bottoming out:

The suburb has been racking up around 10% average annual growth over the past 10 years; however growth over the past 3-5 years has been well below that. There are now signs that the property market is on a rebound. Sales activity has started picking up over the past three months and already surpassed the volume of transactions during the same period last year with a 20% increase. This resulted in a modest increase in house price during that time. Its affordability is a big draw to families who are priced out in the neighbouring suburbs such as Charlestown where median house price sits at around $390,000.

Gateshead is one of the few suburbs in the Newcastle region where you can count on finding a house for under $300,000. It is just 6km to the beaches at legendary surf spot Redhead and a quick commute into Newcastle. That is moving the area up on the lists of first time home buyers especially.

Investors are also starting to take notice of Gateshead, which boasts strong rental yields of above 6% and a tightening rental market. The expanding Lake Macquarie Private Hospital means investors can count on a good pool of medical professionals looking for rental housing.

Best street:

Goundry Street: A broad street with good access and several charming brick homes.

Lakemba (Units)

Median price: $250,050
Average discount: 7%

Kickers:

  • Good transport links to Sydney CBD
  • Good amenities
  • Affordability
  • Strong rental yields
  • Rising rents

Signs of bottoming out:

Sales activity ramped up significantly during the three months ending December with the number of sales transaction rising by 20% compared to the same period last year according to Residex. Median rents for units jumped solidly, up $40 per week to $340 compared to a year ago, which indicates demand is outstripping supply in a big way.

The healthy demand pushed median up by 4% during the quarter. The 12 month growth of 8% is still well below the 2011 and 2010 performance when unit price rose 12% and 15% respectively, which means the current level offers a significant discount for savvy investors looking to buy into the area.

Best street:

Surrounding Wangee Road: Good access to trains and amenities, with a good mix of units and houses.

Queensland

Rocklea (houses)

Median price: $280,000
Average discount: 23%

Kickers:

  • Only 9km from Brisbane CBD
  • Good access to transport, shopping
  • Affordable compared to surrounding suburbs
  • Strong rental yields

Signs of bottoming out:

More than a year after the flood waters receded, Rocklea appears poised for a real estate recovery as strong rental yields and good demand are bringing investors back into the market. RP Data recorded a steady market in the past three months compared to a 6% drop in the previous quarter.

The level of stock has fallen steadily since April last year to just 21 properties up for sale, according to realestate.com.au.

Best street:

Bale Street: One of several older, more established streets in the southwest part of the suburb.

Inala (houses)

Median price: $290,000
Average discount: 10%

Kickers:

  • 25 minutes to Brisbane CBD
  • Good local shopping, restaurants
  • Affordability
  • Low vacancy rate

Signs of bottoming out:

Inala’s market suffered along with the rest of the region in the wake of the 2011 floods, but strong fundamentals and increased buyer confidence point to an up-year for this up and coming suburb.

Median price have stabilised in the last three months after falling 1.69% in the previous quarter. Growth has been sluggish over the past 3 years. However, demand seems to be recovering with realestate.com.au recording a steady rise in the number of people looking to buy in the suburb, up 7%, and at the same time stock has been falling steadily since November. Rents have risen by 3% over the past 12 months as the vanancy rate shrinks to 0.93%.

Best Street:

Goldfinch St: This long, broad street boasts a number of well-maintained homes with striking front gardens, along with good access to parkland and shops.

South Australia

Campbelltown (units)

Median price: $290,000
Average discount: About 6%

Kickers:

  • Only 20 minutes to Adelaide CBD
  • Desirable suburb
  • Strong demand
  • Low housing supply
  • Low vacancy rate
  • Rising rent

Signs of bottoming out:

This leafy suburb about 10km northeast of central Adelaide trended down over the past year, but the suburb appears to be recovering as confidence returns to the wider Adelaide market.

The volume of sales transactions has almost doubled over the past 12 months, indicating recovery in demand is well underway. Rents are also rising strongly – up $40 dollars per week compared to a year ago according to Residex.

While prices have come off since 2010, the market looks to be settling in Campbelltown especially for units, which are moving off the market in a fairly brisk 38 days on average.

Best Street:

Greenglade Dr: This long, quiet street marks the border of Linear Park and boasts a number of larger homes with well-maintained flower gardens.

Port Noarlunga (units)

Median price: $236,000
Average discount: 1%

Kickers:

    40 minutes to Adelaide CBD

  • Stunning beaches
  • Affordability
  • New transport links and rezoning
  • Rising sales
  • Rising rents

Signs of recovery:

Port Noarlunga and other areas along the southern beaches of Adelaide are showing signs of roaring back to life following last year’s economic concerns. The number of sales have started to pick up and have already surpassed the level it recorded last year, according to Residex. Rents are also rising with landlords now getting an extra $10 a week compared to a year ago, which translates to a gross rental yield of around 6%.

The number of potential buyers has increased dramatically: up 36% since September 2011. This comes as the level of stock listings continues to stabilise, according to realestate.com.au.

Apart from the beach and the proximity to Adelaide, locals point to the quaint charm of its historic downtown. For those looking to commute to Adelaide prospects are getting better on that front as well as the duplication of the Southern Expressway, and the train line extension will also help maximise growth in the region.

Best Street:

Whitton Rd: The areas surrounding this broad road offer great access to some of the region’s best beaches

Tasmania

Dodges Ferry (houses)

Median price: $245,000
Average discounts: 9%

Kickers:

  • Desirable beachside, relaxed lifestyle
  • Affordability
  • Strong rental yields
  • Rising sales

Signs of bottoming out:

Dodges Ferry hasn’t seen double-digit growth since 2007 when house price recorded a 10% increase in median. Since then, growth has been sluggish at around 3% each year. However, there are signs a recovery is around the corner.

The number of sales has picked up significantly – nearly doubling the number of sales recorded during the same quarter last year. Median price has started to move up as well. During the past three months to November house price rose 4%.
Best Street(s): Carlton Beach Rd: This long winding road has a dramatic feel as it meanders along the coastline and features larger homes with stunning views and access of Park Beach and several other area beach spots.

Lenah Valley (Units)

Median price: $279,000
Average discount: 6%

Kickers:

  • 10 minutes to downtown Hobart
  • Desirable location
  • Affordability
  • Strong rental yields

Signs of bottoming out:

Median unit value has been relatively soft over the past five years recording just 6% growth each year, which is less than half the average annual growth of 14.6% over the past 10 years, according to RP Data.

Signs that it’s emerging from the bottom include a modest increase in median during the past three months and rising number of sales (up by 20% compared to the same period last year). Rental yields are solid at around 6% as the vacancy rate sits at just over 1%. Properties are taking less than two months to sell on average with the auction clearance rate pretty high at 83%, indicating strong buyer interest. The number of potential buyers is rising steadily to 34 per property as stock levels fall sharply to just 65 homes up for grabs, according to realestate.com.au.

Best Street(s):

Girrabong Rd and surrounds: Newer homes and good views from this neighbourhood on the edge of Mount Wellington sets it apart as one of the more sought after in Lenah Valley.

Victoria

Newcomb (houses)

Median price: $275,000
Average discount: 6%

Kickers:

  • Proximity to Geelong CBD
  • Affordability
  • Good coastal access
  • Low vacancy rate at 1.88%

Signs of recovery:

House price has been flat for the past two years. However, there are indications this is about to change. The number of sales has been rising steadily over the past six months. During the past three months alone, 40 properties changed hands. According to Residex, that’s a third higher than the volume it recorded over the same period last year. The time it takes to sell a property is also falling steadily to around 49 days as homebuyers and investors jostle to snap up Newcomb’s affordable offering. This is further confirmed by the rising number of potential buyers in the suburb. Realestate.com.au recorded 29 people searching for every listed property. Stocks have also fallen steadily over the past six months.

Newcomb sits just 3km from downtown Geelong and next door to much pricier East Geelong, which has pockets of $700,000 homes.

Best Street:

Poplar St: A long block of older, well established homes tuck in a residential quieter residential area, but still featuring great access to Geelong and beaches to the south.

Western Australia

Hillman (houses)

Median house price: $277,000
Average discount: 10%

Kickers:

  • Rising sales
  • High rental yield
  • Low supply
  • Rising demand

Signs of bottoming out:

Median house price for the suburb has been declining since 2007, however, there are now signs of an imminent turnaround. The number of sales recorded during the three months ending December has nearly doubled the volume sold during the same quarter last year, according to Residex.

Realestate.com.au also recorded a surge in the number of potential buyers since November – 20 people for every listed property. In contrast, stock listing has been falling steadily during the same period, which is now down by 21%.
Demand for rental property is also very strong with the vacancy rate sitting at just 0.94%. On average, investors are achieving north of 6% rental yields for their properties.

Best street:

Bargain buys can be found along Malbeling Cl, Nardie Place, Tarup Pl and Carvie St.

Bayswater (units)

Median price: $267,000
Average discount: 7%

Kickers:

  • Proximity to Perth CBD
  • Good public transport links
  • Ongoing gentrification
  • Zero vacancy rate
  • Strong rental demand

Signs of bottoming out:

Prices appear to be stabilising with the rate of price drop now lower than the previous months. Since 2008, unit price growth has been stagnant, which further suggests a turnaround is now long overdue. Market activity continued to strengthen with the number of potential buyers increasing steadily, up by 12%, since October.

Correspondingly, stock listing has fallen by 3%.

Best street:

Anywhere on the city-side of Grand Promenade is generally considered to have the greatest growth potential as the area is adjacent to the much higher priced suburb of Inglewood.

To discuss this article or anything to do with your finances, please call our office today and we will be happy to assist you.

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