Low risk, high reward suburbs

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A sure thing is hard to come by in property, just like any investment, but you can do your best to minimise risk. Proximity to the city and the coast are two of the best qualities an Australian suburb can have. Possessing one or the other is good, but having both is priceless. 

If beachside or inner-city suburbs are out of your price range, you can consider investing in their cheaper neighbours, where values should logically catch up. At any rate, risk is minimised, because the economic foundations in such areas are firm and unable to falter in a serious way. Here's a look at some key markets that meet this criteria.

Manly Vale, NSW

(Median unit price: $438,500) (Rental yield: 5.78%) 

Selling points: Units in suburbs surrounding the world famous Manly, on Sydney’s northern beaches, present an extremely low-risk case for the safety-seeking investor. While the median price for units in Manly itself has pushed into the $700,000 range, some of the nearby suburbs are still affordable in comparison. In Manly Vale, just 3km from Manly and 10km from the Sydney CBD, the median is just $438,500; a figure that will grow in the coming years as Manly grows outwards and investors contribute to its gentrification. Close to the city and close to the beach; two factors that make prices stable and growth inevitable. 

Convenience and lifestyle: Often dubbed the insular peninsula, the northern beaches region has a few transport issues. However, Manly Vale locals can take express buses to the city, or further north along Pittwater Rd. If they want to get a ferry, they have to take a bus first, or walk to Manly. Lifestyle is the big kicker for the suburb, with an array of beaches nearby, numerous sporting and recreational amenities, parks, reserves, golf courses and much more. Schools, cafes and restaurants abound, while shoppers can choose from the boutique retail outlets of Manly or the enormous Warringah Mall on the suburb’s fringes. 

The numbers:

  • Plenty of investors are recognizing Manly Vale’s potential, with units averaging just 48 days on the market and auctions clearing at a 100% rate
  • Renters make up a steady 39% of the population and contribute to a solid 2.22% vacancy rate
  • Listed units make up 0.47% of the total properties in the area 

Typical deals: Established two-bed units are popular among listings and will go for close to $500,000. Anything close to the median will be good value for money. Houses are selling for around $1 million and three-bed units can be picked up for less than $600,000 in some areas.

Montrose, VIC

(Median house price: $407,500) (Rental yield: 4.1%) 

Selling points: A great numbers play, Montrose is in the midst of a supply shortage that it shares with other suburbs in its area, 35km to Melbourne’s east, at the foot of the Dandenong Ranges. Like sea-changers in coastal towns to Melbourne’s south, tree-changers are taking advantage of new roads and flexible workplaces to set up shop in the centre of nature’s glory. Breathtaking scenery and peaceful atmosphere aside, the numbers make sense for investors looking for long term stability. A lack of properties for sale or rent in the suburb promise steady median growth in years to come, as well as upwards pressure on rental returns. 

Convenience and lifestyle: A serene existence is the main driver for people wanting to live in the area and the lack of bustle means a shortage of entertainment options. However, you still have access to everything you need; basic restaurants and takeaway shops litter Mount Dandenong Rd, catering to the tourists who contribute significantly to the area. Montrose also hosts a number of primary and secondary schools, major and organic supermarkets. 

The numbers:

  • A 0% vacancy rate suggests demand if you want to lease your property
  • Buyers are snapping up auctioned properties at a 100% clearance rate, after a short average of 53 days on the market 

Typical deals: Listings consist almost entirely of three and four-bedroom houses. The established properties are often pretty cottages or bigger houses, showcasing well-maintained gardens and lawns, and go for the median or below, while newer properties are featuring upwards of $500,000.

Holland Park, QLD

(Median house price: $522,500) (Rental yield: 4.87%) 

Selling points: Located 7km to the south-east of the Brisbane CBD, Holland Park is logically poised to take advantage of the outward spread of popular inner city suburbs next door. Gentrified suburbs Coorparoo and Woolloongabba both have median house prices of at least $100,000 more than Holland Park, despite being within 3-4km from the suburb. This makes it attractive for priced out buyers and renters looking to emulate the same lifestyle in a nearby location. Overall, proximity to Brisbane and a general supply shortage are likely to see a continuance of the 8% average annual growth that Holland Park has experienced over the past decade. 

Convenience and lifestyle: Holland Park offers a good mixture of city and suburban life, with affordable houses, parks and village vibe, just a bus ride from the Brisbane CBD. A number of restaurants and cafes line the Logan Rd strip, while primary and secondary schools are spread across the suburb’s fringes. While not on the train line, buses service the area and main arteries such as Cavendish Rd and the Pacific Motorway provide fast access to the city. 

The numbers:

  • Listed houses make up 0.37% of all properties in the area and attract an average online interest of 67 clicks per property
  • A low vacancy rate of 0.82% and excellent auction clearance rate of 91.6% indicate properties are in demand from tenants and investors alike, laying the foundations for future growth 

Typical deals: Large family homes with up to five bedrooms and significant land allotments make up most of the available properties in Holland Park. Some two-bed units can also be picked up for $350,000 and below.

More suburbs on the next page.

Willetton, WA

(Median house price: $617,500) (Rental yield: 4.16%) 

Selling points: Location is the driving force behind stability in Willetton. Situated just 16km south of the Perth CBD, the market there is reaping the rewards of Western Australia’s exposure to the resource boom. An influx of mining company executives has seen rental demand soar and vacancy rates tighten. Willetton also boasts large, reasonably affordable homes in a location just south of the Canning River and a couple of suburbs inland from Fremantle. Properties in the area are generating plenty of interest and a shortage of houses on the market means competition from investors will add further value to prices.

Willetton was established in the early 1970s and is approximately 16km south of the Perth. 

Convenience and lifestyle: An abundance of open space makes Willetton perfect for families; parks, reserves and sporting complexes dot the suburb and are close to local high schools and primary schools. Derek Jones, director of EOS Property Group points out that Willetton’s accessibility is another big draw. “It’s surrounded by major arterial roads, it’s served by two train stations and is close to the Canning Vale Light Industrial Area. It’s got ample shopping, private and public schools and public transport facilities are available. Willetton SHS is a leading Western Australian public secondary school and properties in the schools catchment area generally attract a premium,” he says. 

As a result, the suburb is dominated by houses and homeowners.  The low number of multiple dwellings suggests redevelopment opportunities are currently limited. 

The numbers:

  • Willetton renters make up 17.4% of the population, which is close to ideal when considering demand and competition
  • A perfect auction clearance rate of 100% and an online search ratio of 43.6 clicks per listing indicate plenty of buyer interest
  • A 0.49% vacancy rate suggests rental returns are likely to be squeezed upwards 

Typical deals: Large houses are the order of the day in Willetton and if you can snare a four or five-bedroom home for under $700,000 you are doing well. Some older three-bedroom properties are up for grabs for cheaper and many are on large land allotments, meaning value can be added through renovations. 

Mortdale, NSW

(Median unit price: $368,500) (Rental yield: 5.13%) 

Selling points: Sydney’s southern suburbs en route to the Sutherland Shire are generating interest from investors of late and Mortdale is one of the picks of the litter. While it is 15km from the CBD, it is on the train line, making it closer for commuters and also linking it to beach suburbs and further down the south coast. A very affordable median unit price of $368,500 is likely to grow in the near future, as Sydney’s supply shortage fuels its relentless outwards spread. Mortdale units are also currently considerably cheaper than neighbours such as Hurstville, Kogarah and Oatley. 

Convenience and lifestyle: Accessibility makes Mortdale an extremely attractive prospect. The suburb hosts a train station, is well serviced by buses and is also quite close to Sydney Airport. A quiet atmosphere and a number of local schools make the suburb a good place to raise children. Numerous parks and reserves also provide recreation and fitness opportunities. A number of restaurants can be found at the junction of Morts Rd and Macquarie Pl, near the rail line, as can grocery stores and hotels. Retail shopping is limited. 

The numbers:

  • Units are spending an average of just 32 days on the market, while auctions are clearing at a rate of 83%, indicating plenty of interest from buyers
  • A 1.12% vacancy rate and yield of 5.13% are great rental conditions for a purchase based on lack of risk 

Typical deals: Two-bedroom units and three-bedroom houses are prominent amongst the listings. Most of the apartments are selling for around the median and prices suggest that two and three-bedroom units are offering the best value, while one-bedroom apartments are a bit expensive.

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Top Suburbs : sunshine , emerald , belmont , artarmon , padbury

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Comments
  • Daniel says on 26/02/2013 02:24:05 PM

    Rubbish. There is never such a thing called "Low Risk, High Reward". If you want the High Reward, you need to take the risk.

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