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Changes to rental yields could highlight investment potential

On Oct 31 2013
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The latest Australian Property Monitors (APM) report has detailed a number of changes that occurred ...

The latest Australian Property Monitors (APM) report has detailed a number of changes that occurred in the Australian rental market during September, which could be of interest to those with investment property.

Nationally, the median asking rent for houses increased by 1 per cent, while unit rents increased 0.7 per cent during the September quarter. However, there was various growth between capital cities.

Melbourne and Brisbane were the only two states across the nation that experienced growth in the median rent for houses - rising by 2.8 and 1.3 per cent, respectively. Furthermore, only Sydney and Brisbane recorded a rent increase for units during this period, growing by 1.1 and 2.8 per cent, respectively.

Overall, this could signal a great chance for property investors to enter the market and secure cheap property in the hearts of capital cities. For example, the median asking price for a house in Sydney is currently sitting at $500, while the asking median rent for units is now $480.

This means that the rental returns on both will be fairly similar over the same period. However, the median price for a house in Sydney during the September quarter rose to $722,718. The median price for a unit in Sydney now sits at $515,035 - a significant saving on the initial spend to establish an investment property.

Anyone considering buying a property in Sydney for investment could do well to consider purchasing an inner city apartment, due to the cheaper prices and similar rental returns to those from a house.

Overall results were similar in Melbourne. The median asking price for a house in the Victorian capital rests at $550,374, while a unit in the city has a median cost of $391,386 - a difference of $158,988.

However, the median rent for homes in Melbourne rose to $370 during the September quarter, while units remained the same at $360. Purchasing apartments in these two capital cities seems to be a lucrative idea, especially for new property investors beginning on the property ladder.

Now could be the perfect time to purchase investment property, as both Melbourne and Sydney are expecting population booms in the coming years. Securing positive pieces of real estate in these cities now could be profitable for smart buyers in the future.