Information about work, life and play in Regional Australia

Friday, July 29, 2011

Country real estate still offers best returns

Yesterday in NSW rental yields by LGA - June quarter 2011, I provided some data on rental yields in NSW. Today, the Sydney Morning Herald carried a story suggesting that Australian house prices continued to decline.

In any in investment house, the final return depends upon the combination of rental yield with capital gain. The higher the rental yield, the lower the capital gain required, the more secure the investment. In those days when I was buying investment houses I did okay because i bought in the country with a starting high gross rental yield by metro standards.

If you look at the rental yields for NSW in yesterday's post, you can see how low Sydney yields are even with recent rent rises. That is one reason why house prices themselves are in trouble.

If you look at country yields, you ace that country yields are higher. The best country returns have passed; in many areas, prices are up. You should have bought two years ago. Still, in comparison with Sydney gross yields remain better, capital gain prospects at least as good.

It remains true: go country if  you want to make money.     

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