We first started buying RESIDEX reports about 6 years ago.
These reports estimate the future median house prices of suburbs over 5 and 8 years. Many have been skeptical about their validity.
5 years ago we wrote 3 bulk emails profiling the RESIDEX predictions of some suburbs.
We just checked those 3 suburbs that were profiled 5 years ago. Here are the results.
Actual – Jan 2012 – $361K.
Forecast – Jan 2017 – $541K.
Actual – Mar 2016 – $575K (exceeded forecast after 4 years and 3 months)
Actual – June 2011 – $523K
Forecast – June 2016 – $784K
Actual – Mar 2016 – $800K (exceeded forecast after 4 years and 9 months)
Actual – June 2010 – $613K
Forecast – June 2015 – $988K
Actual – June 2015 – $980K (fell short by $8K in 2015, however in 2016 Median House Price is now $1,030K).
High rents and low-interest rates. This combination has almost always spurred on investor activity. The chance to own property with a “low out of pocket” commitment is attractive but I often need to remind people that the primary objective of investing is to achieve capital growth.
A great number of my clients list “buying an investment property” as one of their main aspirations. However, most do not know where to start. I always point people in the direction of the Residex property prediction reports.
I describe these prediction reports as investment range finders because they rank the top 100 suburbs by their anticipated capital growth over an 8 year period.
Here is an example of the suburb that ranked 3rd in the most recent report….. Hassall Grove. With a median property value of $361,000, this suburb is within the reach of many investors.
Consider the property below which is currently listed for sale in Hassall Grove for $360,000. According to the Residex forecast, this property could be worth around $648,000 in 8 years time. 20 Climus Street, Hassall Grove NSW 2761 – This 3 bedroom brick veneer offers a modern kitchen with gas cooking and dining room area off the kitchen. Good size lounge with ceiling fan. Updated bathroom with separate shower. Large covered pergola with manicured lawns. Single Garage under the main roof with internal access
If we apply Residex’s median rental yield for Hassall Grove of 5.48% then you would expect to rent this property out for about $380 per week.
If you were to borrow $288,000 (80% of the value) to purchase this property, your repayments would be in the order of about $354 per week (Interest Only).