Positive gearing suburbs in Australia’s hottest property market

Western Australia remains Australia’s strongest property market, with home values up 23.2% to a median price of $751,000 in Perth and 14.9% to a median of $528,000 in regional Western Australia over the year to August. This is the highest rate of annual capital growth among Australia’s capital cities and regional areas, according to Proptrack data.

Rents have also risen more in Western Australia than anywhere else. The latest available Proptrack data covering the March quarter shows a 15.5% annual increase in rents in Perth and a 14.3% uplift in regional Western Australia. The state has also seen the strongest growth in property investment lending as investors from all over the country seek to buy in the booming market. Proptrack economic analyst Megan Lieu said investor lending in Western Australia was 48% higher in the June quarter compared to the same period last year, according to Australian Bureau of Statistics data.

Rapid increases in weekly rents have led to more suburbs across the country offering positive gearing opportunities for investors. Proptrack has identified 140 positive gearing suburbs nationwide where rental returns entirely cover the investment loan repayments for investors.

“Rent growth has … outpaced home price growth over the last 12 months, making conditions increasingly favourable for investors,” Ms Lieu said. “While many of them are benefiting from the current market, those with properties in select suburbs are not only seeing their rental income cover their mortgage but also deliver positive cash flow.”

The data shows Western Australia has 57 positive gearing suburbs, which is the most of any state and territory. Examples of these suburbs are listed below. The data assumes a 30-year loan at an 80% loan-to-value ratio (LVR) with an interest rate of 6.52%.

Positive gearing suburbs in Western Australia

Baynton

Baynton is in the Pilbara mining region and is the best positive gearing suburb in the state. Investors can cover their mortgage repayments with $2,100 per month to spare, according to Proptrack data. A typical house in Baynton costs a median of $682,500 and fetches $5,600 per month in rent. This is more than enough to cover the monthly loan repayment of $3,458.

Kambalda West

Kambalda West is in the Goldfields-Esperance mining region of Western Australia. A typical house costs $180,000 and rents for $1,520 per month. The mortgage costs $912 per month, which gives investors surplus cash of $607 per month to help cover other expenses like council and water rates.

Port Headland

Port Hedland is the second largest town in the Pilbara mining region and another strong positive gearing suburb. The median house price is $730,000 and the rental return is $4,900 per month. The investment loan repayment costs $3,698 per month, leaving the investor with $1,201 per month in their pocket. Investors on a lower budget can buy an apartment for a median of $474,396, which will rent for $3,200 per month and easily cover the mortgage of $2,403 per month.

Cable Beach

In the Broome region of Western Australia, Cable Beach sits on a 22km stretch of white sandy coastline along the Indian Ocean. The suburb was named after a telegraph cable that was laid between Broome and Java in 1889. Cable Beach houses have a median price tag of $670,000 and rent for $3,930 per month which is more than enough to cover the loan repayment of $3,394 per month.

Perth CBD

Investors can purchase a unit for a median of $465,000 and rent it out for $2,480 per month in Perth CBD. While the loan repayment gobbles up most of this, costing $2,356 per month, it is a notable rarity for a CBD suburb in the centre of an Australian capital city to deliver positive gearing.

Mosman Park

Mosman Park is an affluent suburb along the Swan River in Perth. An Australian house price record was set here in 2009 when mining magnate Chris Ellison bought a waterfront mansion for $52.5 million. Property investors can achieve positive gearing in this suburb with apartments. The median unit costs $380,000 and commands $2,000 per month in rent. This covers the monthly mortgage repayment of $1,925.

Somerville

Somerville is a positive gearing suburb in the city of Kalgoorlie-Boulder in the state’s Eastern Goldfields region. An investment unit here will cost a median of $282,000 and command a monthly rent of $2,440. This easily covers the loan repayment of $1,428 per month, with more than $1,000 to spare.

Tucked away in Byron Bay’s coveted hinterland, Whimsy Farm is a traditional rural homestead surrounded by more than 16ha of lush fertile grounds with equestrian facilities and a host of whimsical additions including a fairytale-inspired maze.

Just listed with Sotheby’s International Realty Byron Bay, agents Denzil Lloyd and Will Phillips are running an expressions of interest campaign on the glamorous getaway with a price guide of $5.25 million to $5.75 million.

The romantic estate in Federal, 25 kms from Byron Bay dates back more than a century, but has been meticulously renovated by its current owners to attain modern day dream home status.

Back in 2016, the enviable property even featured on Foxtel’s short-lived reality TV show I Own Australia’s Best Home. The picturesque parcel has also been appreciated by location scouts and has appeared in a long list of fashion brand and magazine shoots such as Country Style and Queensland Homes.

Owner Melinda Boundy, founder of boutique interiors firm Melinda Boundy Design, was instrumental in reviving the historic Federal homestead. She has described the rural property as a “a respite from the world” where she and her husband have raised their two sons over the past decade.

“I brought my boys down 10 years ago to nurture their creativity, their boyhood,” Boundy said in a recent Instagram post announcing the impending sale.

“We found our farm with its double-storey treehouse and 40 acres the perfect place for two young boys to thrive.”

In addition to hiring out the estate for formal events, Boundy said the family had celebrated several milestones at the address.

“Many parties, sleepovers, friends staying and events have been held [here]. It has seen the filming of a TV show or two, music videos, location shoots and weddings,” she added.

“Now it’s time to pass the baton to another family to share the magic and wonderment of this beautiful compound.”

Lloyd agreed that the listing is a magical estate, ripe for the picking.

“It’s a wonderland. There’s the maze, but it’s also got the treehouse, teepee, dams, beautiful established veggie gardens and it’s perfect for those who love horse riding,” Mr Lloyd said.

“It really is an oasis with plenty of classical charm as well. It’s not an ostentatious home; it’s an original Queenslander from 1910.”

Living up to its storybook name, Whimsy Farm is home to a preserved traditional Queenslander residence with five bedrooms, plus a freestanding guest cottage. There is also a separate pool house and a combined shed or office on site, all capturing scenic hinterland views.

The main single-storey residence has a choice of entertaining spaces inside and out as well as bedrooms opening to private alfresco areas. A grand kitchen and the large living room both open to a vast terrace and pool area.

In the primary bedrooms suite there is a bay window overlooking the natural surrounds, an ensuite with double vanities, and out on the covered deck an outdoor bathtub is an idyllic spot for soaking under the stars.

The playful property has also operated as a holiday rental and offers up unique bonus features including a solar-heated semi circle pool, a double-storey treehouse, a teepee, horse stables, paddocks and a an Olympic-sized dressage arena.

A true tree change destination, the Federal address is home to 10 acres of regenerated forest, eight water tanks, two lagoons, extensive raised veggie gardens and a citrus orchard.

It is conveniently located a scenic 30-minute drive to Byron Bay and 20 minutes to Bangalow.

Whimsy Farm at 711 Federal Dr, Federal is listed through Sotheby’s International Realty Byron Bay through an expressions of interest campaign closing February 20, 5pm.