Mount Gambier investor market remains strong: HTW residential
The investor market in Mount Gambier is currently strong with a mix of both local and out of town investors, according to the August Herron Todd White (HTW) residential report.
The valuation firm took a look at investor markets across the nation.
The report suggests properties in Mount Gambier are generally cheaper compared to say Adelaide or Melbourne. Paired with low interest rates and returns of approximately six to seven per cent, there is a much better return for property.
"After speaking with local agents, it is clear that the market in Mount Gambier has not slowed due to the effects of Coronavirus and while it was expected that rental prices would drop due to the increasing supply of short term rentals being listed as long term rentals, this has not deterred investors," the valuation firm said.
Houses have been hitting the market and some are receiving offers within 48 hours, often at the asking price or higher, with many going to the highest and best offer.
Investors are generally after houses that present well and are low maintenance, within the price range of $200,000 to $350,000. The return for anything above this will likely not be as strong, the report noted.
The government’s incentive to build has definitely spurred the market, with over 20 land sales in the popular Springview Drive division within the past couple of weeks, however this hasn’t been a huge benefit to investors as they cannot simply build and rent these houses out straight away on completion of the build.
"Within the Mount Gambier region, typical investors tend to invest in a mixture of units and detached houses, which are likely to be in the $150,000 to $250,000 price range.
"For depreciation benefits they also invest in new houses, ranging from $250,000 to $350,000," the valuation firm said.
A division popular with investors in Mount Gambier is the O’Leary Road division . An example of a recent sale within the division is below.
3/20 O'Leary Road (pictured below) is a small three-bedroom, one-bathroom dwelling with a single garage under the main roof, on an allotment of approximately 450 square metres. This property previously achieved a rental of $340 per week or a gross yield of 6.8 per cent.
In recent years the South Australian Housing Trust has also been selling off their unwanted Commission housing.
Typically these are older stone dwellings constructed in the 1950s and 1960s offering three bedrooms, lounge, bathroom and laundry area. These Commission homes are typically good value and show a good return.
A semi-detached three-bedroom duplex at 13 Schinkel Street (pictured below) can be purchased for $100,000 to $130,000, with an achievable rental for these dwellings being around $190 to $200 per week.
This provides a gross yield of approximately ten per cent. The capital growth would not necessarily be good, and the quality of tenant may also be an issue, but the return is pretty competitive.
The property below sold for $109,000 and achieves a rental of $195 per week. This is a yield of 9.3 per cent.
"It is expected that the investment market will remain strong within Mount Gambier for quite some time.
"With low interest rates, it is more beneficial for an investor to invest in property and achieve a good return for good value, rather than keep their money in the bank."