{"id":11014,"date":"2017-03-23T15:00:04","date_gmt":"2017-03-23T04:00:04","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=11014"},"modified":"2017-03-23T15:00:04","modified_gmt":"2017-03-23T04:00:04","slug":"sydney-and-melbourne-investors-should-consider-rental-yields","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/sydney-and-melbourne-investors-should-consider-rental-yields\/","title":{"rendered":"Sydney and Melbourne investors should consider rental yields"},"content":{"rendered":"

In his column for\u00a0Switzer<\/a>, John McGrath\u00a0discusses the rising\u00a0demand from\u00a0investors in Sydney and Melbourne. \u00a0<\/strong>
\nDemand from investors in Sydney and Melbourne is particularly high today following significant property price rises over the past five years in both cities.\u00a0\"mcgrath\"<\/a>
\nInvestor appetite for bricks and mortar is reflected in the latest finance figures which show that NSW and VIC together accounted for 76.3% of all new investor borrowings nationwide in December 2016, the largest share of the market on record, according to CoreLogic and the Australian Bureau of Statistics.
\nSeparately, NSW represented 49.6% of national investor finance and VIC 26.7%.
\nBy comparison, at the start of the boom in mid-2012, investor lending in NSW was 37.3% and 25.1% in VIC.
\nClearly, investor interest is highest in Sydney and that\u2019s because of its outstanding recent capital growth.<\/p>\n

But it\u2019s crucial that investors do not forget the importance of\u00a0rental yields<\/a>.<\/h4>\n

Right now, the two cities with the greatest investment activity are also the cities with the lowest rental yields.\u00a0\"Sydney_night_9_04\"<\/a>
\nDrilling down and using Sydney as an example, weekly rents have actually been rising while yields have been falling.
\nThe latest\u00a0Rent and Sales Report\u00a0<\/em>from the NSW Government shows the median Sydney rent has risen from $450 per week in the September 2012 quarter to $520 in September 2016.
\nThat\u2019s good news for investors who already own property.
\nBut, for new investors, the yields they are receiving are lower overall because the pace of capital growth has been much faster than rents.<\/p>\n

In Sydney, average yields are 2.8% for houses and 3.7% for apartments, according to CoreLogic.<\/h4>\n

In Melbourne, they\u2019re 2.7% for houses and 4% for apartments.
\nIn Brisbane\/Gold Coast, it\u2019s 4.1% for houses and 5.3% for apartments.
\nThe cities with the highest rental yields are Darwin at 5.1% for houses and Hobart at 6% for apartments.
\nI suspect the low yields in Sydney and Melbourne aren\u2019t concerning today\u2019s investor buyers because interest rates are so low.\u00a0<\/strong>
\nMortgage repayments of 4-4.5% are relatively easy to manage on properties yielding 2.5-4%.
\n\"melbourne\"
\nBut what happens when interest rates return to their long-term average of 7-7.5% and the rate of capital growth inevitably slows as the market returns to normal conditions?
\nWhile capital growth should always be an investor\u2019s number one priority, rental returns are crucial for servicing your debt.
\nThe only way for most people to make money in real estate is by holding for the long term.<\/strong>
\nSo, Sydney and\u00a0Melbourne investors<\/a>\u00a0out there buying today \u2013 at what is likely to be the tail end of this boom \u2013 need to make sure their chosen investment will provide enough rental income to help them cover th
\neir rising mortgage repayments over the next 10 years and beyond.
\nToday\u2019s investors also need to be wary that supply of rental properties is rising because so many investors are buying, which means tenants have more choice and this might affect vacancy rates.<\/p>\n

I\u2019m not saying that investors shouldn\u2019t buy right now.<\/h4>\n

\"SydneyTerraces\"
\nBut it\u2019s important to do your sums and make informed decisions based on a long-term view.
\nBe careful in your property selection too, particularly with apartments given supply will be increasing in the short term due to the construction boom.
\nMake sure there are some unique features that will differentiate your apartment from the rest.
\nThis will help protect your rental return, reduce your vacancy periods and maintain your capital value.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

In his column for\u00a0Switzer, John McGrath\u00a0discusses the rising\u00a0demand from\u00a0investors in Sydney and Melbourne. \u00a0 Demand from investors in Sydney and Melbourne is particularly high today following significant property price rises over the past five years in both cities.\u00a0 Investor appetite for bricks and mortar is…<\/p>\n","protected":false},"author":176692471,"featured_media":10651,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-11014","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-story"],"yoast_head":"\nSydney and Melbourne investors should consider rental yields - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/sydney-and-melbourne-investors-should-consider-rental-yields\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sydney and Melbourne investors should consider rental yields - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"In his column for\u00a0Switzer, John McGrath\u00a0discusses the rising\u00a0demand from\u00a0investors in Sydney and Melbourne. \u00a0 Demand from investors in Sydney and Melbourne is particularly high today following significant property price rises over the past five years in both cities.\u00a0 Investor appetite for bricks and mortar is...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/sydney-and-melbourne-investors-should-consider-rental-yields\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2017-03-23T04:00:04+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/#\\\/schema\\\/person\\\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"Sydney and Melbourne investors should consider rental yields\",\"datePublished\":\"2017-03-23T04:00:04+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/\"},\"wordCount\":570,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/#primaryimage\"},\"thumbnailUrl\":\"\",\"articleSection\":[\"Latest Stories\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/\",\"url\":\"https:\\\/\\\/channels.realty.com.au\\\/realtytalk\\\/sydney-and-melbourne-investors-should-consider-rental-yields\\\/\",\"name\":\"Sydney and Melbourne investors should consider rental yields - 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