Cross-border investing

Map of Australia

A mixed property market has investors looking across states to secure better returns.
The latest CoreLogic RP Data Hedonic Home Value Index has revealed not only the variation in housing prices around the country, but also the differences in rental yields.

It’s a mixed bag for dwelling values, with some cities performing well in the past 12 months, while others foundered: Sydney +9.5%; Melbourne +11.1%; Brisbane +5.5%; Adelaide +2.8%; Perth -3.1%; Hobart +6.2%; Darwin -2.9%; and Canberra +4.5%.

While there has been no growth in weekly rents across the combined capital cities over the past 12 months, for most cities there have been retractions: Brisbane -0.7%; Adelaide -0.4%; Darwin -13.3%; and Perth -8.4%. The gross rental yield figures for each city are also telling:

Capital City Houses Units
Adelaide 4.1% 4.7%
Brisbane 4.2% 5.3%
Canberra 4.1% 5.2%
Darwin 5.2% 5.3%
Hobart 5.0% 5.1%
Melbourne 2.9% 4.0%
Perth 3.9% 4.3%
Sydney 3.2% 4.2%
Property values and rental returns are key factors in determining the suitability of an investment property.
Investors keen to diversify their portfolios and spread their risk, while staying in the property market, are now looking at cities with better performances and outlooks.
Buying in another state can be a daunting proposition, but there are ways to help minimise the risk of making a costly mistake:
  • Do your research
    Find out as much as you can from every resource at your disposal (research data on the internet, local property managers, friends) about the area, the local rental market and what types of rentals are in demand.
  • Check carefully
    Always remember caveat emptor – buyer beware – and do your due diligence. Get pest, building and strata reports checked by professionals.
  • Make sure the figures add up
    Run the figures and make sure the buy will match your investment goals.
  • Cultivate a good team
    Establish a trust-worthy local team including a real estate agent, specialist property law solicitor, pest and building inspectors, maintenance contractors and of course a property manager who’ll be able to manage the property for you.
The rental rules and regulations vary from state to state and you need to be aware of your obligations, so seek professional advice. But one thing that is universal is the need to protect your asset, so speak to us about your insurance needs.