Rental properties in the Latrobe Valley remain affordable, despite being in high demand, as investors flock to the region to grab a bargain, new data released by Real Estate Institute of Victoria shows.
Data released by the peak body for real estate professionals indicates five of Victoria’s top 20 towns for return on investment are within Latrobe City boundaries.
Churchill tops the list with a gross rental yield for a three-bedroom house at 7.3 per cent on the property value, behind Moe (6.8 per cent), Morwell (6.6 per cent) and Newborough (6.5 per cent) in what real estate agents have called a “very attractive” offer.
A two-bedroom unit on average returns a 7.2 per cent yield in Moe, slightly higher than Traralgon’s 6.5 per cent.
Weekly median rentals for a two-bedroom unit at Moe are below $200 a week, while tenants can rent a three-bedroom house in Morwell or Churchill for about $250 a week.
It compares to people on the surf coast at Torquay and Barwon Heads who are paying between $400 and $500 for a similar dwelling.
Regional landlords across the state are receiving a gross rental yield of between 4.1 per cent and 4.8 per cent for two and three-bedroom houses on average, comparing favourably with one-bedroom units in inner Melbourne returning a slightly higher return at 5 per cent.
Stockdale and Leggo Morwell and Traralgon managing director Jim Demetrios said the region’s rental market was running at about a 1.5 per cent vacancy rate with the demand for rental properties the highest it has been in a number of years.
“It means we’ve got a shortage of rental properties, there’s a high demand and a majority of the properties are occupied,” Mr Demetrios said.
“[The] return on investment is very attractive in comparison to other areas like metropolitan areas or other regional areas because of the price range. Return on investment and also the entry level on being able to purchase an investment property is low.
“For instance, you can buy an investment property for between $150,000-$200,000 and the property would rent out in excess of $220 per week and what we’ve found with the affordability of properties and low entry level, it has allowed many investors to purchase multiple properties and create a portfolio over a period of time.”
Investors to the Latrobe Valley – and tenants – are often “pleasantly surprised” with the region’s infrastructure including housing, medical and sporting facilities and lack of traffic, Mr Demetrios said.
“People aren’t coming in and buying five houses at once but the same investor over a period of five years could end up buying a property a year over that period,” he said.
“Investors in Melbourne are struggling to achieve 2 to 3 per cent on investment whereas many investors in the Valley are achieving a gross return of in excess of six per cent.”
KW Property Sales and Rental Morwell agent Frank Palermo said he had been “inundated” with people moving into the area – and investors buying property due to the lucrative return on investment.
“We’re at the point where we’ve had to point on another staff member and we could do with a few more just to deal with the demand in property management,” Mr Palermo said.
“People have realised they can buy and sell an investment property in Melbourne and then invest in the Latrobe Valley where they can buy two or three properties for the same price.
“As one guy pointed out to me if he bought a property where he lives it would be worth $600,000 plus, but he could come to the Valley and buy a few properties depending on the price.”
