The Victorian suburbs ‘rentvestors’ should target
Renters who can’t afford to buy in their favourite areas should target growing suburbs with strong prospects on Melbourne’s fringes, according to new research.
Houses in Millgrove and units in Melton West, Craigieburn, Sunbury and Cranbourne provide the best bets for Victorian “rentvestors,” property research website LocationScore recommends.
These markets have high rental yields, affordable prices and strong growth potential based on other key metrics including clearance rates and days on market, according to LocationScore.
This makes them prime for “rentvesting” — a growing strategy which involves buying in an affordable area and continuing to rent in a better location for work and lifestyle preferences.
LocationScore head of research Jeremy Sheppard said buyers could get on the property ladder in these outer suburbs.
'When people priced out of the markets they’re renting in actually own in an alternative market that means they’re on the property train and not chasing it along the tracks,' he said.
Mr Sheppard said renters could catch up on owners of units in pricier places like McKinnon, Brighton East and Mont Albert while enjoying the same lifestyle attributes: 'With units providing just over 3 per cent gross return (rental yield), tenants are definitely coming out ahead of owners (in these suburbs).'
Rent.com chief executive Greg Bader said while affordability was a driving factor, the growing popularity of rentvesting was a reflection of a wider shift in how a younger generation wanted to live.
'Not only are people more prepared to move and change jobs, suburbs, cities, states, countries, also job security is not where it was many years ago either,' he said.
'People are feeling they need to maintain some level of flexibility … (but) the bigger picture is they’re just more rounded and put more value on some of the lifestyle factors.'
Nicole Haddow bought in Mordialloc but rents in Richmond close to her work and friends.
'I’m not in any hurry to buy closer to the city, the lifestyle I’ve set up is exactly what I’ve been looking for,' she said.
'My investment is sitting there with tenants taking good care of it and I’m renting in Richmond at a price lower than my mortgage because I’ve also got a housemate.'