Sky-high yield figures divide opinion

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RP Data’s revelation that it is possible to get 16% rental yields in one of Australia’s emerging housing markets has some commentators urging investors to get active, while others are not so sure

For years, property investing has been the enclave of those with plenty of cash to spare, but some observers believe this is starting to change.

After reviewing suburb statistics commissioned from RP Data, Aussie Home Loans executive chairman John Symond said there are at least half a dozen suburbs in each capital city where rental yields are greater than the cost to repay the mortgage.

“It’s the perfect time for the average Australian to consider a move into property investment if they have some money saved. Both fixed rates and variable rates are the lowest they have been in years, with interest rates below 5%.”

Housing prices in some areas are historically low, according to the research, but are starting to move back up and Symond claims investors can earn rental yields of between 5% and 10% in some areas and as high as a 16%  in Bellamack, Darwin.

However, Northern Territories broker franchise principle, Tony Schelling, said he is concerned the data may be slightly skewed.

"Bellamack has had some pretty new homes, so 16.9% -you’d have to have very, very low cost housing. The average house in the area is probably $600,000 and they’re getting about $1,000 per week for rent. I think the figure does seem a little high.”

Schelling said he didn’t want to question RP Data, but said it’s possible for figures to occasionally become ‘adjusted’ by limited sales.  

Otherwise, he largely agreed with Symond, adding that local rental yields are high, especially for units.

“Darwin in particular has opportunities for those who have a focus on investment and unlike towns like Gladstone in Queensland, which also have high rental yields... Darwin has a multi-stream economy.”

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  • ben says on 19/03/2013 02:25:58 PM

    The sales evidence for the NT market emerging suburbs has always been out of touch with reality, if RP Data dig deeper with their data they will find they are calculating rental returns on vacant land sale prices, Bellamack's titles have only been registering in the last 12 months and resales with constructed houses are few and far between.
    I think people like John Symond and RP data need to do a bit more research before releasing potentially misleading information in the way of press releases to push their own companies.
    Good on Tony Schelling for his diplomatic quote obviously not trying to offend the powers that be from the big smoke

  • Barbara in Darwin says on 19/03/2013 06:40:19 PM

    Agreed. I have made the same comment regarding previous RP data articles. A friend who bought in Bellamack advised me that the title for her land sale was lodged after the builders had completed the work, but was based on the vacant land price. If anyone cared to follow it up they would see that the prices are based on land not completed packages - it makes me wary of using other RP data figures.

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