The suburbs handing landlords 17pc capital gain and $20k cash flow

Eliza Owen, CoreLogic head of research said Perth has benefited from the strongest cumulative rental growth of the capital cities since the onset of the pandemic and is gaining the fastest momentum for price growth.

“Total growth in rents is about 49 per cent since March 2020, which is much higher than what we’ve seen across capital cities,” she said.

“Perth is also going through a window of really strong capital growth as well currently, with the highest annual growth of the capital cities at 9 per cent over the year.”

Sydney, Melbourne investors look west

Units in inner Perth suburb Glendalough are achieving the highest cash flow each month at $415 or $4980 a year after interest repayments, excluding other costs.

With a median at just $298,733, mortgage repayments are substantially lower at $1717 a month compared with monthly rental income of $2132. In the past year, values have increased by 7.2 per cent.

Meanwhile, units in Orelia are raking in $397 cash flow a month and values have outperformed the broader market with 11.5 per cent growth in the past year.

Perth-based buyer’s agent and Resolve Property Solutions director Peter Gavalas said Perth’s property market was becoming an investment target by Sydney and Melbourne buyers due to its affordability, high yields and strong capital growth prospects.

“Perth stands out as the only capital city where dwelling values have returned to record highs after the recent downturn,” he said.

“Despite this, Perth remains one of the most affordable cities in Australia with a median value of $618,363 in September, according to CoreLogic. That level of affordability coupled with the strength of the underlying state economy is attracting investors looking for both yield and growth.”

Mosman Park, Thornlie and Wembley are also racking up strong cash flow at $148, $222 and $270 a month respectively. In the past year, unit values in those suburbs had increased by 8.8 per cent, 11.6 per cent and 6.7 per cent respectively.

Outside Perth, units in Waterford West in south-east Queensland and Spring Hill in inner Brisbane are also earning high enough rents to cover the mortgage repayments and still delivering $80 and $23 cash flow a month.

In inner Melbourne, unit rents in Travancore, Carlton and Melbourne city have increased by up to 24 per cent in the past year, resulting in cash flow of $66, $42 and $13 a month respectively.

However, values have only lifted by 0.7 per cent and 1.7 per cent in Travancore and Melbourne city respectively and have dropped by 6.4 per cent in Carlton in the past year.

For houses, Kwinana Town Centre in Perth’s south-west and Darwin suburbs Gray, Moulden, Woodroffe and Zuccoli were the only capital city suburbs where rents were higher than mortgage repayments.

Meanwhile, mining towns such as Nickol, Baynton and Port Hedland continued to score strong cash flow of up to $1738 a month or $20,856.

Victor Kumar, a veteran property investor who owns properties across the country, said a granny flat could help Sydney investors boost their cash flows.

“A granny flat can increase your cash flow if done right. We recently picked up a brand-new house with a granny flat in Menangle Park for $1.25 million and the combined rent on that was $1200 a week, so around 5 per cent yield a year. It’s slightly negative, but it becomes positive if you add the depreciation benefits,” he said.