IntroThis week we are continuing a series looking at affordable unit markets that are experiencing high growth and solid rental yields. This week’s focus is Sydney.
NewsIn this week’s property news, building approvals rose strongly in November bouncing back from a slump in October. According to data released by the ABS total houses and apartments approved for construction rose 5.9% for the month. The Bureau says private sector house approvals rose 1.9% over the month.
In other news it appears that the consecutive rate rises have caused weakness in sales of new and established dwellings. According to a report in The Australian, data supplied by mortgage broker Australian Finance Group show that applications for new mortgages fell 21.2% in December.The Housing Industry Association says sales of new homes in November by its members were down 10% from the high reached last August.
Suburb in FocusIn our suburb in focus section each week, we look at property markets around Australia that could be of interest to property investors.
We have compiled a list of affordable unit markets in all the capital cities around Australia that are experiencing high growth and solid rental yields. Both suburbs this week have median unit prices under $250,000 and have also shown strong gains in the last year. This week the focus is Sydney and we’re looking at the unit market in Berala but first up is Campbelltown which is located about 50kms south west from Sydney’s CBD.
Its population was just over 8,000 in the last census. Campbelltown is a major commercial centre and a central business district of South-western Sydney and Macarthur region. 69% of Campbelltown’s residents were Australian born and English is spoken in 79% of homes. 37% of properties in the suburb are rental properties. 73% of dwellings are houses, 13% are units and another 13% are semis. The suburb’s population includes clerical and administrative workers as well as trades and technicians.
The median unit price in Campbelltown is $242,500 which is an increase of over 25% compared to a year ago. In 2008 growth was still strong at over 20%. There were 62 units sold in Campbelltown in the 12 months to November 30. The median rental price is $228 bringing the gross rental yield to 4.88%.
Now to the unit market in Berala which is located about a 20 km drive west of Sydney’s CBD. Berala’s population in 2006 was just under 8,000 people. It is a multicultural suburb with just 40% of the population being born in Australia. Just 25% of properties are English speaking with strong Chinese, Vietnamese and Lebanese communities in the suburb. 32% of dwellings are rental properties. Houses make up 65% of properties and 25% are units.
The median unit price in Berala is the exact same as Campbelltown’s at $242,500 dollars, which is an 18.3% jump compared to a year ago. 2008 growth was virtually flat. There have been 46 units sold in the last 12 months. The median rent price for a unit in the suburb is $290 which brings the gross rental yield to a solid 6.22%.
Tax TipFor astute property investors, peace of mind is important. That’s why so many investors have landlords’ insurance. This is relatively cheap insurance policy - on average around $300. And the cost is tax deductible.
The cover varies, but in general landlords’ insurance protects a landlord if a tenant causes property damage, or if the tenant fails to pay rent or ‘does a runner’. Sometimes the bond payment is not enough to cover outstanding costs by a tenant and in this case, landlords insurance can help out.
Remember, usual building insurance may still be required so check your landlords’ insurance policy so that you know what is covered. And remember, this is general information only. For specific advice, consult your accountant or tax adviser.
