Investors have been served up a cheat sheet of the best suburbs to park their cash in every capital city market for maximum returns.

Exclusive analysis from comparison site Finder has revealed the safest and riskiest markets around the nation, with the inner and middle-ring suburbs forecast to be top performers.

Some of the more affordable urban pockets were blacklisted as best to avoid.

It comes as investors claw back more of the market from owner-occupiers, with further price growth and a severely undersupplied rental market boosting returns for savvy landlords.

In Sydney, Finder’s deep dive into potential rental returns and capital growth showed most of the best suburbs for investors were in the inner south.

The worst Sydney markets – considered to be volatile with low prospects for capital growth – were concentrated in the Hawkesbury region, Central Coast and parts of the outer west, the index shows.

Brisbane’s best prospects for house price growth were in up-and-coming inner suburbs.

Melbourne homehunters were served a shortlist of six star suburbs, but warned a dud decision could cause long-lasting financial woes.

Adelaide’s top picks for unit and house buyers were also laid bare.

It comes as new lending data showed a dramatic shift in buying behaviour in recent months, with many would-be first home buyers becoming investors instead.

The Mozo analysis indicated first-home buyers opting for investment loans grew by a quarter since the ABS first began tracking this type of loan profile in 2019.

“There’s been a significant shift in the number of Aussies choosing to invest in their first property, rather than live in it,” said Mozo personal finance expert Rachel Wastell.

“Soaring property prices and high rates are influencing new buyers’ strategies, and while lightyears away from dominating the first-home buyer market, this small cohort of investors is growing.”

PropTrack senior economist Paul Ryan said latest figures showed investor loans had climbed to 40 per cent of the market total, reflecting a national rebound on the back of soaring rental growth.

“Investors are clearly responding to high rents and low rental availability as we have seen investor lending grow over the past year,” Mr Ryan said.

“This is what we expect and it is one of the ways the market will recover from the really tough rental conditions we’ve seen.”

Mr Ryan said the pattern of growth over past decades “may not be matched”, as future development took a different path in response to renewed demand for higher density living.

“Over the longer period we have seen low density regions perform a little better, but the shift we’ve seen in the period past the pandemic is a big snapback in rents for high density property as people have shifted back to the cities.”

Growth centred around the inner and middle ring suburbs was predicted to intensify along with planned infill development, transforming underused or vacant sites within existing urban areas and leveraging existing infrastructure.

Propell Property managing director Michael Pell said market conditions for investors remained “extremely strong”, anchored by “very robust buyer demand” across the price spectrum.

Commenting for Property Investment Professionals of Australia (PIPA)’s national market update, Mr Pell said the rental market remained severely undersupplied.

“Investor activity is very strong from local and interstate investors, who recognise the opportunities to purchase across the state,” Mr Pell said.

“That said, there is still a huge land shortage, and developers are putting their land prices up, and they’re only going to do that if the market is strong.

“So, there is urgency for people to secure properties because the prices are going up.”

Rich Harvey, the director of PropertyBuyer, one of the country’s biggest buyers’ agencies, said market expectations of an interest rate cut in December or early next year were already spurring investors.

“The savvy investors are trying to get in now,” he said. “There are still opportunities to make money in Sydney but you have to look at which way the tide is going.

Finder.com.au head of research Graham Cooke said the investment index was designed as a “starting point” for investors to narrow down their locations to buy a home, but warned all prospective buyers to do their own research.

Originally Published: Vivia Hyde | News.com.au | 10 August 2024

https://www.news.com.au/finance/real-estate/mapped-best-and-worst-suburbs-to-invest-in-across-every-city/news-story/8b8dd1ac148f90456acd35594db3b55f?btr=deff9d3f08e2c9338aecc35f3b2a2d10

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