Live where you love, buy where you can afford

First-time buyers and investors can have the best of both worlds – live where they want and buy an affordable property, rent it out but have a toehold in a market that could get away from them.

According to Nicola McDougall and Kate Hill co-authors of The Female Investor (subtitled “creating wealth, security, and freedom through property”), the secret is “rentvesting” – renting where you love while buying and letting where you can afford.

And, to back up their advice, they claim they have found five of the best rentvesting locations in Australia – places where purchase prices are low but demand for rental properties is high.

Ms McDougall, who is also the Director of Bricks & Mortar Media and a board member of the Property Investment Professionals of Australia (PIPA), says in a press release that the strong price growth of last year did not have to dampen the property ownership dreams of prospective property owners, because many locations continued to be affordable.

“As well as many young people moving to more affordable areas over recent years, rentvesting has become a popular strategy for those who want to buy property but still want to live in an expensive real estate city such as Sydney or Melbourne,” she said.

Kate Hill, who is also a Qualified Property Investment Adviser (QPIA) and a property buyer at Adviseable, said rentvesting was a strategy that involved purchasing property in a more affordable location and continuing to rent the property you live in.

“Renting continues to be more affordable than purchasing in desirable pockets of major cities, where buy-in prices can easily be millions of dollars and where many young people desire to live,” Ms Hill said.

“However, being a long-term renter without putting your money to work has significant ramifications on your financial future as well as potentially causing hardship in retirement.”

This is backed by new research by the Grattan Institute, which claims most Australians still believe that they will have their own home paid off by the time they retire, but that is no longer a certainty.

The research found that by 2056, the rate of homeownership for over-65s will have declined from about 76 per cent today to about 57 per cent. Ms McDougall said means more people could be spending their twilight years living in poverty.

“The research means that young people in their 20s today may find themselves without a home to call their own in retirement, with many likely to be financially stressed if they rent, or even to suffer poverty,” she said.

So the Female Investor authors have identified five areas across Australia, in Greater Sydney, Melbourne, Adelaide, Perth and Brisbane where, they say, purchase prices are relatively low but rental demand is high.

Greater Sydney

In the Penrith suburb of Kingswood, the median house price is $790,000 but the rental vacancy rate is only 1 per cent. (Anything below 5 per cent availability is taken to represent a rental shortage).

Ms Hill said Western Sydney is considered Australia’s third largest economy with more than $22 billion earmarked to be spent on transport infrastructure, including ‘WestConnex’, Parramatta Light Rail, and Badgerys Creek Airport, over the next few years. “

Employment in Western Sydney is expected to grow 47 per cent within the next 14 years,” she said. “Penrith City Council and business organisations have seized the moment and are implementing plans to create 12,000 jobs by 2036.”

The decision to build Sydney’s second airport at Badgerys Creek adds to the strategic appeal of Penrith and has acted as a catalyst for other large-scale projects, Ms Hill added.

“These projects include the $5 billion Sydney Science Park and the Penrith Health and Education Precinct with trade training, a specialist science and maths high school, and a new university is to be established at North Bringelly.

“The precinct will be part of the $10 billion ‘Aerotropolis’ economic hub, delivering jobs, homes, infrastructure, and services. The project can expect significant funding from the Western Sydney City Deal, a collaboration between three levels of government.

“In the past two years, Penrith’s property market received a ‘ripple effect’ from the growth in Sydney, with most suburbs experiencing double-digit annual growth in median prices in recent years.”

Ms Hill said the area was ideal for rentvesters or homebuyers with slightly higher budgets. “Penrith has a robust major infrastructure program, recorded population growth every year for decades, has diverse industries that keep its economy vibrant, as well as a more affordable property market that is incredibly active for both renters and buyers,” she said.

Melbourne

The median house price is only $657,000 in the suburb of Cranbourne, while the rental vacancy rate is only 1%.  

Ms Hill said the Victorian Government has identified several suburbs in the City of Casey Local Government Area (LGA) to play a major role in service delivery and creating employment in its long-term planning document.

“The area’s population growth rate during recent census periods was higher than other rapidly growing outer Melbourne municipalities. In fact, it’s growing at a rate more than twice the national average,” Ms Hill said.

“Local industries are diverse, which means the area is not dependent on only one industry hence the area is less volatile which keeps employment rates very stable.”

Ms Hill said about 60 per cent of locals live and work in the area and generally don’t commute into the CBD, which makes it an attractive lifestyle choice for families along with very affordable housing compared to most of Melbourne.

“The economic fundamentals of the area are very solid with continued price growth potential,” she said. “Casey City Council release land for development responsibly, and have done so thus far, keeping supply steady.

“In spite of developments to cater for the growing population, the growth charts are steady, vacancy rates are generally low, and rents have been increasing steadily.”

Brisbane

In the Moreton Bay Regional Council LGA, the Caboolture median house price is only $445,000  while the rental vacancy rate is 0.7%.

From surging population to myriad major infrastructure projects, including a brand-new university in Petrie and the redevelopment of Caboolture Hospital, the Moreton Bay region ticks many investment fundamental boxes for new and seasoned investors, Nicola McDougall said.

“A few years ago, Moreton Bay was classified as a priority growth area by the State Government, with its population predicted to hit half a million within about two decades,” she explained.

“One of the many major projects that is earmarked for the region is the development of Caboolture West, which is a growth precinct that boasts a plethora of attributes as well as affordable property. Caboolture West will also benefit from an updated structure plan to deliver a new community, with a population similar to that of the city of Mackay.”

The broader Caboolture West area was also identified as a major expansion area within the South East Queensland Regional Plan, Ms McDougall said.

“Caboolture West is at the heart of a rapidly growing corridor north of Brisbane and is expected to eventually provide about 30,000 homes for around 70,000 people as well as generate close to 23,000 jobs,” she said. “The area will also have access to a number of primary and high schools as well as a TAFE and a private hospital.”

Adelaide

In the City of Onkaparinga’sMorphett Vale, the  median house price is only $430,000 with a miniscule rental vacancy rate of 0.1 per cent.  This exemplifies Kate Hill’s view that Onkaparinga has strong population growth forecasts, coupled with affordable property prices, and low vacancy rates as well as access to the central city.

“The area also has an attractive seaside location, with a track record of steady price growth and above-average rental yields in one of South Australia’s strongest population growth areas,” Ms Hill said.

“Over the next 20 years, the region is expected to receive an influx of 48,000 additional residents, making it one of Adelaide’s strongest growth areas.” She added that the region ticks a lot of boxes for rentvesters because it has lifestyle, affordability, improved transport links, economic growth drivers, population growth, and proximity to major jobs nodes.

“For example, $1 billion has recently been spent on infrastructure, including the duplication of the Southern Expressway, the McLaren Vale overpass and the electrification and extension of the Noarlunga rail network to Seaford,” she said.

“The outcome is excellent and easy accessibility between Adelaide and the Onkaparinga region, which also has a diverse range of industries to support the local economy.”

Perth

The median house in Mirrabooka, a suburb: of the City of Stirling LGA is only $385,000 while the rental vacancy rate is 0.4 per cent.

Nicola McDougall says the City of Stirling is one of four precincts in the Perth metropolitan area that led the recovery in the Perth property market two years ago, following the city’s multi-year real estate downturn.

“The region offers a leisurely seaside lifestyle, being home to the internationally renowned Scarborough Beach, as well as trendy bars and cafes that impart a youthful vibrancy that attracts a steady stream of 20 to 40-year-olds,” she said.

“Adding to the region’s appeal are the shopping and education facilities, coupled with good transport links to the Perth CBD.”

Ms McDougall said the City of Stirling is also the largest local government area in Perth, the largest local government by population in the state, and the second largest employment district in Western Australia after the Perth CBD.

“Serious development began to occur there in the 1960s and 1970s as Perth expanded,” Ms McDougall said.

“The City of Stirling has also initiated a project to improve the suburbs of Balga, Dianella, Nollamara, Mirrabooka, and Westminster. “Generally, these suburbs can expect revamped town centres, improvements to transport, and higher-density housing.”

The Female Investor

The duo’s book, The Female Investor,  will be published on April 1 this year. It addresses the multiple financial challenges facing women of all ages, pointing out that one in three Australian women will retire with no super?

“It’s not easy balancing a career, dating, a family, and a thriving personal life, all while saving for your future,” says the book’s online promo.

“This practical and down-to-earth guide, written by two female experts who have been there and done that, will teach your how to maximise your income sooner, so you have more choices later.”

You can read more about it and pre-order a copy HERE.