Darling Downs/Toowoomba investors attracted to low-maintenance properties: HTW residential
Investors in the Darling Downs have generally been attracted to low-maintenance properties such as new or near new four-bedroom, two-bathroom, two-car detached dwellings, two-bedroom units and six-bed, four-bath duplex pairs, according to a recent Herron Todd White (HTW) residential report.
The valuation firm took a look at rental yields across the nation.
The report notes the majority of the Toowoomba investor market tends to operate in the sub-$400,000 segment for dwellings, sub-$300,000 for units and sub- $550,000 for duplex pairs.
"It’s unclear whether investors are favouring strategies to seek higher yields or focusing on capital gains," the valuation firm said.
With a slow-moving market at present, investors are possibly seeking a blend of the two strategies.
Some of the western suburbs such as Glenvale, Cotswold Hills and Cranley, and outer lying satellite suburbs including Wyreema and Cambooya have tended to be hot spots for investor activity over recent years.
This is most likely a result of englobo land availability, with the established suburbs unable to accommodate new development.
The report notes yields in these newly developed areas are moderately attractive to investors at circa 4% to 5% for houses and 5% to 6% for units and duplex pairs, however these returns may come at the expense of capital growth.
Buyers seeking to invest in the Toowoomba area could consider purchasing in older suburbs close to the CBD such as Centenary Heights, Darling Heights, Kearneys Spring, Newtown, North and South Toowoomba.
These areas still generate acceptable yields and arguably have greater potential for capital growth due to their proximity to the CBD and services.
A recent trend within the established suburbs in areas close to boarding schools, hospitals or the CBD is short term letting utilising platforms such as Airbnb and Booking.com.
"We have witnessed yields up to and exceeding 10% in select cases, however this comes with intensive management, including managing bookings, financial management and very regular and intensive cleaning," the valuation firm said.
The smaller towns throughout the broader Darling Downs region can show higher yields anywhere from 5% to 10%.
Once again, these higher returns come with a higher degree of capital growth risk.
"Investor interest in Toowoomba and surrounding areas has significantly slowed over the past two years resulting in a reduction in sale volumes, however vacancy rates have declined to sub-2% and rental rates have shown moderate growth. This may lead to an increase in investor activity throughout the Toowoomba region."
