The Finance Show With Joe

Australia’s Best Investment Suburbs For Every Budget In 2025

• It's Simple Finance • Episode 33

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We map the best performing investment suburbs across Australia at three price points, from $500k to $1.5m, showing how leverage and tight supply can turn a modest deposit into meaningful equity. 

We provide three suburbs at each price point and measure their performance based on capital gain, rental yield, and potential future growth in the next 12 months. 

If you ever need any help with your mortgage or your property inquiries or anything along the lines of that, you can visit us at www.itsimple.com.au. If you are looking to invest in property, we also have a panel of buyers’ agents that we work with, and we can refer you several in the market that specialise in each particular location.


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DISCLAIMER This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs before acting on it.

SPEAKER_03:

If you do not attempt to get into the property market, your wage will soon be absolutely destroyed, where you'll be renting for the rest of your life.

SPEAKER_00:

Honestly, by the time you hear this, it's probably too late. It's like getting Apple shares in 2000. There's no real sign that says it's gonna slow down.

SPEAKER_03:

If you're even looking at return on capital measures, it's actually outperformed things like Bitcoin. That has like hugely volatile moments where it just shoots up. No wonder why we're hearing so many whispers and so many rumors about external American funds purchasing these lots because you can't run the stock market at this rate. It's just driving investors there because why not? We're talking about the best investment that you could have bought at the end of 2024. We're actually tracking the best investment properties across Australia. Let's get into the first tier.

SPEAKER_00:

And the first one is Welcome to the Finance Show with Joe. He's Joe, I'm Michael. Today we're gonna be talking about the best performing investment suburbs in all of Australia. But first, I just want to do a little quick catch-up. What have you been up to? As you know, Michael, I've got a newborn.

SPEAKER_03:

Oh yes. And he has taken up a lot of my time. So what you've been up to is not sleeping. Uh, we were already doing that prior to uh the child being born. What it is now is I'm not sleeping and my partner's not sleeping. Now, it's a bit look, I'll be honest with you, the newborn has been fantastic. Having uh a little version of yourself and your wife tucked up in this little ball and they're playful, they're joyful, they smile, they laugh at you. Um I can it is an indescribable feeling that I wish every single person in this world gets to experience once in their life. I know there's a lot of people out there that say that they don't want kids, and that is your prerogative. However, if you do want children um and uh you know you're aspiring to have a family one day, I will say the best is yet to come. And um, may God bless you. And if you are, you know, struggling to have kids, I you are in my prayers, and I hope that one day you'll be able to have children too.

SPEAKER_00:

Yeah, I'm on the fence about having kids, but I guess I'm not just there, I've got to get married first. So yeah.

SPEAKER_03:

So see, that's the old WOG household in Michael talking. That's he's gonna get married and then kids. He and his girlfriend can live together for a period of time, but married and then kids.

SPEAKER_00:

That's although although when I did move in with uh with Sarah for the very first time, my my grandmother, who's like super Catholic, was like, I don't know, that's kind of sin. I'm like, it's 2025, we're moving on from this.

SPEAKER_03:

No, look, I do understand where they're coming from. No meat on Fridays, you know, there's there's some other things that yeah, it's 2025, guys. Like, you know, bacon is everywhere. What do you want me to do?

SPEAKER_00:

Bacon is everywhere. Well, there was that dude who had the bacon on his shoulders that wouldn't.

SPEAKER_03:

Oh man, I saw that, and that was absolutely stupid. That was absolutely stupid. But today, guys, we are talking about not bacon, um making bacon. Um, we're talking about the best investments that you could have bought at the end of 2024. We're actually tracking the best investment properties across Australia uh or the best suburbs, the highest performing suburbs across Australia in 2025. The difference that we have done in this episode is we have actually segmented the best properties to buy at each particular price point.

SPEAKER_00:

Yeah.

SPEAKER_03:

So we've got up to$500,000. We've got up to$750,000. Do we?

SPEAKER_00:

Yes, up to$750,000 and and then up to uh a million and above. Because honestly, when I was doing the research, I was gonna split the million and the 1.5 and it was just no difference. Yeah, I'm just one and a million and above.

SPEAKER_03:

So each particular price point has three suburbs. Yes. And we track the performance based on the capital gain, yep, the rental yield, and the potential future growth that that area is hopefully able to achieve over the next 12 months or so. Yeah. Now, before we do go any further, guys, advice on this channel is general in nature. Extremely general. And should you need specific advice, please contact your personal personal personal broker, personal financial advisor. All right. Let's get into the first tier.

SPEAKER_00:

So this is properties up to up to 500,000. And the first one is Rockingham, Western Australia. This Western Australia's gonna show up a few times, but Rockingham. So medium house price there of$475,000. That was last October. That was last October, yes. 14.5% capital gains. The rent is$550 per week. That's a 5.6% yield. Now, this suburb, uh, I don't know anything about Perth because I've never been there. So I looked into what this suburb is. It's a suburb by the beach, which is interesting, and but it has a reputation of being rough, but it is uh undergoing gentrification.

SPEAKER_03:

Okay.

SPEAKER_00:

So it is not as rough as it's used to as it used to be. Okay. So I'm told.

SPEAKER_03:

Okay, so this was specifically for the units in the area.

SPEAKER_00:

Yeah, yeah.

SPEAKER_03:

This wasn't for the houses in the area, and it's very contradictory to see because quite often, when you are speaking to either buyers' agents, investment professionals, or anyone that focuses in on property, they will tell you you target units for rental yield and for the cash flow, or if you're looking for that accessibility or that amenity, but you don't often target it for capital gain. This has performed in every aspect of the market. So quick maps here:$475,000 last October. If that has increased by 14.5%, that means that it has gone up by roughly$70,250. So you're looking at a median dwelling price of about$547,000. Yeah. Um, to go from$475,000 to$547,000 in the span of 12 months is it's pretty crazy. It's remarkable. There's one particular thing I do want to highlight for our listeners out there. To be able to get into a property of$475,000, okay, you need at minimum a 10% deposit. I'm not gonna go 20% deposits, all that sort of stuff, right? Um, I'm just gonna talk about a 10% deposit.

SPEAKER_01:

All right.

SPEAKER_03:

So you've put away$47,500 to be able to attain this property.

SPEAKER_01:

Yeah.

SPEAKER_03:

If you did make it an investment, there is stamp duty applicable, it's gonna be roughly$15,000 on a property of$475k.

SPEAKER_02:

Okay.

SPEAKER_03:

Okay. So your upfront costs have been$62,000. But with a rental yield of 5.6%,$550 per week, your mortgage at$430,000 with a 6% interest rate. What are your monthly repayments on that? It's going to be about two to$2,500, somewhere around there.

SPEAKER_00:

Which is pretty good.

SPEAKER_03:

So$550 a week per week rent, that means that you have your out of pocket. So$550 times$4.33, you're roughly going to be receiving from the property about$2,400 a month. You're going to have to pay in mortgage repayments about$2,600 a month. So you're out of pocket$2,400 or$200 a month, otherwise$2,400 for the year. Which is pretty damn good. So$47,500 plus$2,400. Okay, so that's how much your outgoings are, which you can claim back negative gearing if you've got a really good accountant, just putting that out there. Okay, plus the$15,000 for stamp duty. So in one year's time, to be able to acquire this property, you have spent let's call it about$65k, but your property has grown by about$72k. You're I'm not gonna talk about return on investment because return on investment is ROI. How much are you constantly investing? How what's your your what's your rate of return on revenue and all that sort of stuff? I'm just gonna talk about return on capital. Your initial capital injection is$62,000, and after 12 months' time, that has increased by uh increased to 72k. So that means your return on capital is over a hundred percent over the year, especially because you don't have to make that much in extra contributions towards your mortgage repayments. So this has performed exceptionally well. You've essentially gone to the casino, like this is the best way. I've done I've done the complex maths, but this is the this is the best way to put it. You've gone to the casino and put$65,000 on a sure thing to double your money in 12 months' time. All you had to do was wait the 12 months, which is I mean, that's worth it. So, like you hear about these properties in Rockingham and WA and stuff, no wonder why they've gone up in value. Because this is the thing about value and properties and the perceived value and everything. Once once one person finds out this is a good investment area, everyone finds out.

SPEAKER_00:

Yeah, honestly, by the time you hear this, it's probably too late. No, do your research. No, no, no, no, no.

SPEAKER_03:

Stop that, because apparently this one's gonna still go up in value. So the projection for this area by FY26 is for each median unit, the median unit value to be around$600,000, which is another 10% increase. So that means you have increased your return on capital by about 180, 190%, and you've got an investment paying itself off. Yeah, you have increased your savings, your equity, your retirement fund, everything.

SPEAKER_00:

I mean, it's a it's barely even a risk with the with after all this math.

SPEAKER_03:

Well, it is no no no, it is still a risk.

SPEAKER_00:

It's obviously still all of this is still a risk because you're investing. Um, but and and the thing is we are even seeing like similar things in Gosnells as well. I think it's partly our next suburb, by the way. Uh, so suburb number two, sorry, I was I was harping on for suburb number one, but suburb number two is Gosnells. In also in Western Australia. Tell me about that property. Median price, 490,000. Okay. 212.4% capital gains. All right, I'll get the quick maths on that in a second. Yeah,$578 per week in rent, that's a 6.2% yield. That's crazy. So, and this is another uh place that is rough and is going up in value. I have heard that Gosnells is a very weird suburb, it's kind of crackhead central, that's what I've heard. Um, but it's incredibly affordable and hence why like anyone it's just driving investors there because why not? It's in it's affordable.$490,000. That is extremely cheap.

SPEAKER_03:

I'm going to give you the quick maths now. Okay, so if you bought a property last year for$490,000, that property is now worth six. Ooh, just under. Okay, it's now worth$599,800 12 months later. So return on capital for that, let's say$49,000 injection, 15% stamp duty, whatever it's gonna be,$15k. So$64,000. And then in a year's time, your property is worth$110,000 more. That's a$200,000 no, it's just under$200.$64,000 is your initial rate uh uh capital injection. That means your return on capital is 190%. So like if you the this is this is the thing, like you hear about these suburbs. So Gosn, this is Gosnell's WA. Yeah, the the rental yields 6.2%. So that's more than covering your mortgages.

SPEAKER_00:

100%. Yeah.

SPEAKER_03:

The agents are raving about this because the infrastructure, the population growth, the interest rates uh, you know, uh by drop the interest rates dropping are driving the growth even further. No wonder why we're hearing so many whispers and so many rumors about external American funds investing in property in Australia and purchasing these lots because you you can't you can't run the stock market at this rate.

SPEAKER_00:

No, when I first when I was doing the research, what it came when it's when I found 212% capital gains, I was like, that can't be right. That's this has got to be an error, but no.

SPEAKER_03:

That is um, that is fuck me.

SPEAKER_00:

Yeah, like it must have gone from literally rock bottom and it's just going going up, just purely because of affordability, slashed interest rates, all that kind of stuff.

SPEAKER_03:

Do you see a mass migration continuing to WA? Because we've seen it in the sense of no the data has shown a lot of people are moving to WA. I don't know anyone personally that has. I've got one client that has done it in the last 12 months, but one out of 300, that's a you know, 0.3% rate.

SPEAKER_00:

Yeah.

SPEAKER_03:

Have do you have any friends that are moving out that way?

SPEAKER_00:

Not a single person. I do know people investing there, but I don't know anyone moving there. That's it.

SPEAKER_03:

Do you think it's migration? No, no, we're not gonna get into that on this one. Okay, the next suburb for the$500,000 bracket.

SPEAKER_00:

The last one. It's Elizabeth North in South Australia, another median price, uh unit price of$490,000. 16.7% capital growth in the last 12 months,$450 a week uh in rent, 5.1% yield. So not as good as Gosnell's on like just on paper, but obviously this is still a great investment.

SPEAKER_03:

Okay, so let's have a look at the quick maths here. So that's gonna be about 60. So let's say the property's gone up by 64k. The median price is now 554,000. So your return on capital is gonna be, you know, yet again, upwards of 100 or 40%. Yeah. Um,$450 a week rental yield, 5.1%. That's pretty good.

SPEAKER_00:

But it's not as good as Gosnell's, but it's pretty good.

SPEAKER_03:

So this is why I was ranked number three.

SPEAKER_00:

Yeah.

SPEAKER_03:

So are we seeing a continuous trend of properties in WA outperforming just the rest of the market?

SPEAKER_00:

Um, you're actually gonna be surprised as we go. And don't get me wrong, WA still shows up a lot of the time because it's it's been doing well for like at least a year now, maybe two. Two years. Yeah. And I think that's gonna continue. I don't think the numbers will be as crazy. I'm also not a professional, so don't take this all with a grain of salt. But I think this is like we're not quite at the plateau yet, but we're nearing it.

SPEAKER_03:

Okay, so another question is gonna be we're starting to see a flow-on effect. So are people choosing to go to South Australia more than they're choosing to go to WA? And I would like to actually hear from other people in the comments. Are we seeing more advice leaning towards South Australia? Is that is South Australia becoming more affordable because WA is becoming less affordable?

SPEAKER_00:

Um, I'm not sure which way it goes, but the data does suggest that in the in 2025, um, South Australia is the best performing state as it as it um in terms of investment in property and stuff like that.

SPEAKER_03:

The city of church is Adelaide.

SPEAKER_00:

Yeah, yeah, sorry, that's took me a contest to figure out what you were saying. Uh yeah, it's I don't know, maybe it's just because it's a little closer to Melbourne and stuff. So maybe if you're from Melbourne and you've got family there, going to Adelaide is like, not that big of a deal. It's a shorter drive than Sydney.

SPEAKER_03:

Uh that's this is I I love this data. I love being able to see the affordability. I'm I'm gonna talk from the broker's point of view right now. Okay, go for it. To be able to afford an investment property for about 490K, your salary, and if your rental income is about$450 a week, your salary needs to be about$75,000 to$80,000.

SPEAKER_00:

Round about the median.

SPEAKER_03:

Correct.

SPEAKER_00:

Um, no, the median's higher than that, but let's not get into it. I thought the median was$75.

SPEAKER_03:

No, the median salary now.

SPEAKER_00:

Yeah.

SPEAKER_03:

No, median full-time salary is$99,000 for females and$109,000 for males. Is that the median? That's the median. Hang on, hang on. This is for adults, by the way. I'm talking about full-time salaries.

SPEAKER_00:

That makes sense. That makes sense.

SPEAKER_03:

Okay, perfect.

SPEAKER_00:

88. 88. We're still not at 99. The average is uh the average is 104. There we go. Yeah. I was gonna say, I'm like, I looked, I looked these numbers up before because you know, I had a panic attack when I saw the average. Not knowing how averages work.

SPEAKER_03:

Joseph was right again.

SPEAKER_00:

Um Joseph was half right.

SPEAKER_03:

So a lot of people might be wondering why we're doing an episode dedicated towards investment properties and um how much they've grown in value. The reason why is property has outpaced cash uh by triple.

SPEAKER_00:

Well, I was gonna say it's not even like it's not even remotely. It's not even remotely close.

SPEAKER_03:

If you if you if you're even looking at return on capital measures, it's actually outperformed things like Bitcoin.

SPEAKER_00:

That's crazy because obviously Bitcoin has had that has like hugely volatile moments where it shoots up.

SPEAKER_03:

Yeah, it's uh okay. So let me explain. To buy a Bitcoin is$160,000 Australian dollars, roughly right now. Okay, yeah. When you purchase a Bitcoin, number one, you can't borrow from the bank to buy Bitcoin unless you've got a I'm not even gonna get into it. Don't go to those brokers. Um but the other thing is your brokers rec recommended. Don't don't don't don't don't don't, man, you're gonna get me cancelled again. Okay, okay. Okay. But let me let me let me somehow explain this to you. So once you own a Bitcoin, you can't, you're not getting a rental return. You're actually not getting any tax benefits from it. And if Bitcoin goes up 20% and you own one Bitcoin, that means your 160,000 turns into, you know, it's gone up 20%, it's gone up to 192,000, right?

SPEAKER_01:

Right.

SPEAKER_03:

So you've had to invest 160,000 to make that$32,000 back. Not the same with property because property, you need a 10% deposit, you're borrowing the rest from the bank, you're getting all these tax exemptions as an investor to make things easier, yeah. To make things easier, and then you are actually being rewarded on the sale price because the sale price doesn't actually go to the bank, like the remaining sale price, unless, of course, you make a loss, but you actually can declare that as a profit. So essentially, you'll you are providing$70,000 to make$70,000 if the property goes up by$70k, for instance. Does that make sense? Yeah. So your return on capital is far outpacing. The reason why we're doing an investment episode or an episode based on the best performing properties in Australia is if you want to be able to buy a property in Sydney, New South Wales, eventually, you're not going to get there by saving. No, no, no, no, no, no. Unless you're in a very, very high-income job, you're actually going to get the best way to get there is through property because the property that you purchase, limited supply, that property goes up by 300%. Okay, and all of a sudden you sell that property and you are then able to draw down, let's say 160k. You can then use that 160k to maybe purchase a 1.6 million dollar property in New South Wales or Sydney, New South Wales, and that is the point of this episode. But I think it is very important for people to understand that. And here are three suburbs where I know we have assisted in funding with clients, okay, that have purchased in WA, purchased in South Australia, that have made this money, and now they are able to purchase in New South Wales, purchase the property of their Jeeps. In saying that, you know, you can go the full other route and say, I want to rent vest, all that kind of stuff. I'm not gonna get into that. I am just saying this is what property is used for in these regional states and these regional suburbs. Yeah. Okay. This is how you can climb into the market. This is how you can build up for your retirement. This is actually how you just become wealthy.

SPEAKER_00:

Yeah. And this is just one strategy. There are there are others, but you know, obviously, we don't have time to get into all that shit today.

SPEAKER_03:

Best suburbs to invest in for 750k.

SPEAKER_00:

All right, first one up. We're back in South Australia, Salisbury East. This is in Adelaide's Northeast, which is a little confusing. That's a median price of$705,000, median rent,$580 a week. The 12-month growth is 16.5%. Jesus! Adelaide is the top performer in 2025, thanks to a very tight supply and fast leasing, often less than three weeks. So it's doing pretty well. Specifically, investor activity in South Australia is just doing great. This is double-digit suburb gains, which is above city yields in any of the affordable bands, which is pretty crazy.

SPEAKER_03:

So 70k deposit, okay, 16.5% growth. Okay, what's 16.5% of that? That's gonna be 42,000, 42,000 plus 70k. It's a so your 705,000 property is now worth 820k a year later. That's crazy.

SPEAKER_00:

That's actually insane. Like when you actually think about that. So just film fill me in on this, just because uh if I'm not clear, maybe someone else isn't. I bought this for 705,000. Yeah, it's now 820, did you say?

SPEAKER_03:

Yeah, roughly 820k.

SPEAKER_00:

Okay, let's just say 820 for the sake of argument. I sell. After that, how much money how much of that do I get? Because I know there's capital gains and there's all that sort of stuff. So how does this work?

SPEAKER_03:

So let's take out 2% um of your uh sale price, agents, agents, fees, commissions, marketing.

SPEAKER_00:

Okay.

SPEAKER_03:

So you're losing 16k automatically because somebody that yeah, the agents. Yeah, the the agents are gonna charge you an arm and a leg for that.

SPEAKER_00:

Okay. Okay.

SPEAKER_03:

So automatically you've got 16,400, that's gone. Then you the remainder of it is from the you pay tax not on the sales price, but the profit made from the sales.

SPEAKER_00:

So the capital gains, right?

SPEAKER_03:

So the capital gains. So let's say you sell for$820,000, you purchase for$700,000. There's still a deduction from there. The interest repayments that you made in the last year, you can also deduct those from your capital gains and any improvements that you've made in the last 12 months as well.

SPEAKER_00:

So you don't quite get$120,000, but you you get like$100,000 maybe, maybe less.

SPEAKER_03:

So let's let's go from the base rate. Uh, capital gains tax is at 30% at the moment. Okay. Rough ballpark. 30% of$120,000 is going to be$36,000. So$120 minus$36,000 is going to be$84,000. Okay. That is how much theoretically you are going to end up with in your back pocket. Okay, okay. Now$84,000, what can that what can that buy you across New South Wales? New South Wales. Well, a number of properties if you use it as a 10% deposit.

SPEAKER_00:

Yeah. Or 20% on an apartment somewhere that's around 800,000, something like that.

SPEAKER_03:

No, 84,000. Not quite there. No, no, no, no, no, no. That's not a 20% deposit. That's that's a 20% deposit on$400,000.

SPEAKER_00:

No, you're right. Yes, I am right. I can't math. This is why I'm in marketing.

SPEAKER_03:

And this is why I'm the numbers guy.

SPEAKER_00:

He's exactly right.

SPEAKER_03:

But uh, but in saying that, you do get your deposit back. So it's you're not how much is in your hand at the end of it, it's also your deposit. So let's say you put in$70,000 for your deposit. Okay, so that$70K goes returns to you plus that an$84,000 profit,$154,000. You might be able to get an apartment for$750k somewhere in Sydney. My rule of thumb, Tom Panos's rule of thumb, who's a fantastic buyer's agent and a number of uh people out there, they often say for your owner-occupied property, you should not have more than$800,000 in debt. And the reason for that is$800,000 in debt with interest rates at about five and a half, six and a half percent. You're you're you're paying roughly five and a half thousand dollars in principal and interest repayments post-tax income.

SPEAKER_01:

Yeah, okay.

SPEAKER_03:

So let's say, for instance, you're earning 100k a year. Okay. After tax, that's gonna be what, 78? Okay. 78, spread that across 12 months. That's gonna be about$7,000 a month.

SPEAKER_01:

Yeah.

SPEAKER_03:

Imagine$5,500 of that goes towards principal and interest repayments on your mortgage.

SPEAKER_00:

Yeah, I mean, I live in that reality. But you see, but you see, no, I totally get it. Yeah.

SPEAKER_03:

But like at least you have your family around you who are also contributing towards the home loan repayments and everything. Yeah, not everyone has that.

SPEAKER_01:

No, no, no, no. Far, far from it.

SPEAKER_03:

So you really have to speak with a broker uh prior to making that sort of decision. Okay, but that is the reason why a lot of people say, hey, maybe look at rent vesting because that's not living beyond your means. I never used to agree with rent vesting, and you know this.

SPEAKER_00:

I remember we've had several conversations about this.

SPEAKER_03:

But property has gone up so much in price that it is looking as like I'm thinking about it.

SPEAKER_00:

Yeah, you're like, oh, bro, what else am I supposed to do?

SPEAKER_03:

Why am I spending so much on my mortgage when I could just go rent something that I like in Sydney? Now, the issues with that is maybe they want to cancel the lease, they want to move back in. I'm at the you know, landlord's discretion. What am I looking for?

SPEAKER_00:

Wim, back and call. Uh, you're his bitch. If you want to put it that way.

SPEAKER_03:

I don't want to be someone's bitch. Yeah, but like that's the reason why I wouldn't run best. But then I also understand other people. Hey, maybe I don't want to spend five and a half thousand dollars a month just to pay off my home. That's not tax-deductible interest. That's not something stuff you have to pay. Yeah, it's just stuff that you have to pay that's adding to your bill. So, business owner me, transaction me, tax me, mortgage me, everything is saying, hey, maybe rent vesting is a good idea. Leb me, Lebanese, Lebanese ingrained, own your house, bro. Like, you know, it's true, yeah. And that that is a that it I I think a lot of cultures are like that. Yeah, but in saying that, that was a great question that you asked. How much is gonna end up in my back pocket after capital gains tax after everything? You might end up with that 150k on our next property. That's 765 to 775,000 for Morton Bay. So that's Morayfield, Queensland, that's in the Morton Bay area. Yeah, I actually know that area quite well. I do not.

unknown:

Okay.

SPEAKER_03:

So 12.5% year-on-year growth. Um, the houses in Brisbane that uh a million dollars plus have pushed people towards this area, yeah. Um, which has lifted the prices significantly. Um, I'm not gonna do the quick maths on this one. I can if you want me to, but I think I've done enough this year.

SPEAKER_00:

No, no, I think I think everyone's got the juice. Let's let's get them the the hard facts.

SPEAKER_03:

And the next one is more lay. So the median price is 820,000.

SPEAKER_00:

To 854, yeah.

SPEAKER_03:

The rental yield, the rent uh rental income per week is$700, and then 18% year-on-year growth. And yeah, you tell me the reasons why.

SPEAKER_00:

Well, I mean, it's just the affordable mid-price stuff is just going nuts because that's what people can afford. You know, there's only so many people with with you know fat stacks, so to speak.

SPEAKER_03:

So, what happens when these people like the way that I'm looking at it outside looking in? It seems like Sydney has kind of turned itself into this like crystal ball that only the ultra wealthy can enter into.

SPEAKER_00:

Well, I guess it's kind of like like LA and New York, right? Like they're super expensive, depending on which part. Well, New York specifically, like Manhattan Island. Like you're that's you know, you're you're paying a ridiculous amount for Sydney as a city.

SPEAKER_03:

Sydney CBD as a city, stretching out all the way to Penrith, I know, is a lot bigger than Manhattan Island. I will tell you that.

SPEAKER_00:

Yeah, no, I I don't disagree, but like they do stuff like that, right? And I don't I I guess once it falls, like once you get to that point where no one can really like newer people can't afford to get in, that's when the bubble pops, right? Is that not what just happens?

SPEAKER_03:

It it is, and this is the issue, and we always bring it up they're not allowing any more high-rises. And we're also so this is a neat statistic I found recently. Our good friend Emmanuel from uh InvestorMate posted this one. New South Wales is 30,000 properties short of its target for 2025.

SPEAKER_00:

Yeah, I mean, we talked about it week after week, like but but but we're making the bubble worse.

SPEAKER_03:

Like me, naked eye investor. Am I looking at Perth or am I looking at New South Wales as where I can go put dump some money and think to myself, what's gonna grow faster? And you know, I always say check with your broker, borrowing capacity, rental incomes, all that sort of stuff. But I think this is something heavy I need to consider.

SPEAKER_00:

Welcome back. Now we're gonna talk about the suburbs that are a million and above, because that's the fun section. Also, this section was so fun, I almost peed myself. Almost. Also, I have a question about this. Is it really like investing a million and above? Is that worth it? I guess it would depend on like what kind of money you make, right?

SPEAKER_03:

It really depends on what you're looking for, what you're seeking from your property. Often when I look at properties that are a million and above to invest in, um, you're looking at land development construction. That makes more sense, right? It does. And then on the other side of it, so like I'm gonna look at the properties that are here. Yeah, yeah, go. Okay, so we've got uh one in WA, one in Queensland, and one in South Australia. So there's spread. Yeah, we don't even have a suburb from New South Wales on this list.

SPEAKER_00:

No, or Victoria. None of them are showing up.

SPEAKER_03:

But what If you're looking to invest upwards of a million dollars, it is usually for the sake of I'm planning to live in that property later on. That's kind of what I thought. And I'm hoping the rental income can pay off a large portion of the mortgage within the first five years by the time I get in. Or you are expecting some serious capital growth in that location that not many people can foresee. So, you know, um Auburn. Oh yeah, yeah. Auburn, great location to choose from. Um the owner-occupied properties there two years ago were worth about a million dollars. Now they're worth about 1.5, 1.6, 1.7, 1.8 even.

SPEAKER_00:

I can't believe that's happened in Auburn. Also, just in and around the train station, all the massive the massive apartment buildings there. Like I remember Auburn as a kid. It wasn't flash. Yeah, you didn't really want to. Well, it still isn't flash, but but it's but the but the value in the property is worth a lot.

SPEAKER_03:

So let me give you a return on capital example. Okay, so let's say I bought a property, Mount Druid. Yep. Let's go with Mount Druid. That's classic. Okay. So Mount Druid, start of 2020, end of 2019, you could have bought a property in one of those locations for about$500,000 to$600,000. I'm talking a house. Yeah. Okay. Freestanding. Freestanding house. Let's say I use a 10% deposit,$50,000. Yep. That property is now worth median value,$1.1,$1.2 million. Okay.

SPEAKER_01:

Yeah, something like that.

SPEAKER_03:

So my initial return of my initial capital investment was$50,000 plus stamp duty. So$70,000. If I was to sell that property tomorrow, or my return on capital so is$700,000. So I have actually 10X my initial capital investment.

SPEAKER_00:

It's actually crazy.

SPEAKER_03:

And then when you think about rental yields and everything and the cost of my mortgage, because that is a suburb that a lot of people rent in.

SPEAKER_00:

Yeah, that's true.

SPEAKER_03:

That is the reason why people will choose to invest in a place where investments are a million dollars plus. So if I take a similar property that was a million dollars when I first purchased it, put$100,000 in for my initial capital injection, good rental yield, let's say, for example, negative gearing, all that sort of stuff. I'm not even considering that. But then I sold it two or three years later for two million dollars, which we are seeing all over the place now. This is not something out of the ordinary.

SPEAKER_01:

Okay.

SPEAKER_03:

Initial capital injection was$100,000. Return on capital is a million dollars.

SPEAKER_01:

Yeah. Okay.

SPEAKER_03:

So the reason why people invest in properties that are upwards of a million dollars is either for land development improvements, they see something in the area, infrastructure projects, and they expect a massive spike. Or they are able to take a higher risk and expect a higher return on capital. Okay. Because sometimes areas don't grow by that by that much.

SPEAKER_00:

No, no. And usually, yeah, no, that's true. Well, our first suburb is Scarborough in Perth's North Coast. Scarborough. Scarborough.$1.28 million dollar uh median house price. The rent is$910 to$950 a week. That's for houses, not units. The capital gains is anywhere from 8.3 to 12.7%, depending on your source. But let's just say, like a firm, 10%. Okay. So this is actually like a nice beachy cafe style suburb. And it's getting both owner-occupiers and investors involved.

SPEAKER_03:

That example right there is the perfect example of what I was just talking about. You've got enough money that's going to be covering off your mortgage plus the negative gear and da-da-da-da-da. Okay. And then$1.28 million. If it's gone up by 10%, you've put$128,000 in and you're receiving$128,000 back. The thing about these types of properties is you're not spreading your risk at, let's say, buying two apartments in one location. Because that's also double the stamp duty cost.

SPEAKER_01:

Ah, yes, yes, yes.

SPEAKER_03:

Okay, because you're buying and you know, you have to pay stamp duty twice. Stamp duty is not something that you can claim back, it's just a transaction. So that is the reason why people would look at suburbs like this, and also they're more desirable suburbs. Yeah. So let's say you go put a CDC or you do a development approval or something like that. Logs. Okay. Let's say I bought a$1.28 million property and I want and got a development application done on it.

SPEAKER_02:

Yeah.

SPEAKER_03:

And I sell it with a set of plants. Just by putting the development application and taking the time and all those things, I might be able to sell that property for even more. Even more. And then that way, because I've made those improvements, the builder that's coming in, they're going to make their profit because they're going to sell two dwellings for you know$1.28 million. I'm going to make my profit because I spent the time with the architect with everything getting improved. So that's the reason why people look at or say, look at these properties. Anyways, property number two, Karina.

SPEAKER_00:

Queensland, inner east Brisbane.

SPEAKER_03:

So$1.265 million. And it has grown by 10% year on year. So it's done multiple times. And then we've also got, last but not least, Prospect in South Australia, which has a median house price, well, had a median house price of$1.28 million and a capital gain of 14.3%.

SPEAKER_00:

It seems like the cap on a good investment right now seems to be 1.28 million. Anything above that, you're like, all right, maybe maybe I should consider living in this.

SPEAKER_03:

But like you're going to ask me a question soon of is property still a good thing to purchase or is it still worth investing in property in Australia? The answer is yes. And the reason I say this is we are living in a country that rewards you through tax concessions by owning an investment property, especially if you're self-employed. Especially if you're self-employed. Okay. If you are self-employed and you are investing in property, you are essentially putting money away, reducing your tax, your ta any money that you're going to spend on tax, you may as well put it in a property that's going to grow in value. You're being rewarded for owning business and essentially the government saying, here, there's a property that's going to grow in value. It's like getting Apple shares in 2000. Yeah, right. It's growing at an exponential rate that is uh indescribable to people outside of Australia. And the reason why is because they have governments that actually build properties. Like we're in a massive housing shortage and we've got a lot of people moving to Australia. We saw the riots the other week. Oh, don't stop letting migration in and all this kind of stuff. I think you and I even argued about it. We didn't argue, but we discussed it on a podcast. And I was there in the middle, and I'm like, hey, just approve more dwellings.

SPEAKER_00:

Yeah.

SPEAKER_03:

That's it. But is it a good idea to still purchase in Australia? It looks like at every single price point, we've given you nine properties, nine different price points, nine different markets, nine different suburbs, three different states. We didn't include anything from New South Wales and Melbourne, which we know still grow.

SPEAKER_00:

Yeah. Okay. And Tasmania, but who gets it? Yeah, that's the thing. Or even the stuff that we left off the list is still growing. It's still growing.

SPEAKER_03:

It's still growing at a rapid rate. So my answer to myself. My gift from me to me is my gift from me to me is property is still a good investment in Australia.

SPEAKER_00:

Yeah.

SPEAKER_03:

You need to speak with a good broker. And you need to understand your borrowing capabilities. Because if you don't get into the market soon, and I am, I am creating that FOMO element as someone who owns multiple properties. And I've never said that on this podcast. As someone who pays principal and interest repayments, who has to tries to be an ethical landlord in the sense that my tenants contact me and they go, We need fly screens to be put in, and we also want these things to be repaired. And I say automatically, without hesitation, yes. Why? Because these are also people trying to make it in this world. Yeah. With all of those things in consideration, I am saying to you now, if you do not attempt, and I'm using the word attempt, attempt to get into the property market, your wage will soon be absolutely distraught, where you will be renting for the rest of your life, and you will be at the be at a disadvantage.

SPEAKER_00:

You're doing yourself a disservice by not trying.

SPEAKER_03:

Massive disservice, but you will also be at the landlord's um will.

SPEAKER_00:

Yeah.

SPEAKER_03:

Fuck. We've got to find that word though.

SPEAKER_00:

Prerogative.

SPEAKER_03:

Man, we're going too far left of field.

SPEAKER_00:

But yeah, no, you don't get a you don't get a say in your own house and all and all that sort of stuff. You know, honestly, like there are exceptions to that rule. You might have a really good relationship with your landlord and all that sort of stuff, but you know, you can never say. Like, just you don't know.

SPEAKER_03:

Just try and get into the market, speak to a professional who works in that market, do some research. People say it's too hard. The people that are often here say it's too hard are people that have never gotten on the phone with the broker. They're also people that have never gone on realestate.com.au after they've gotten on the phone with a broker and seen what they can afford. They've also never just gone on realestate.com.au and seen how houses or units perform in those locations. Yeah. They're people that just say, ah, it's too hard to throw their heads in there.

SPEAKER_00:

Smash it out. All right. Rapid fire questions. Joey, number one, what is the six-year rule for investment properties?

SPEAKER_03:

So the six-year rule for investment properties is when a property has previously been your main residence, and then afterwards you elect to make it an investment property or to receive investment income from that property. The six-year rule is how long a property cannot be your main residence prior to the government treating it as a main residence when it comes time for taxes when you are going to sell that property. So let's say, for instance, I've lived in my property for 12 months' time. I then turn it into an investment, and then in six years' time I choose to sell the property, I won't be charged a capital gains tax because that was my previous place of residency. Okay, well, that's good.

SPEAKER_00:

All right, next. That is good. Uh, is it worth investing in property anymore? We've kind of answered that, yeah. All right, should I buy a house now or wait until 2026? Yeah, get into the market.

SPEAKER_03:

Yeah. Just get into the fucking market. Just do it.

SPEAKER_00:

Yeah. How to avoid how do I avoid capital gains tax on an investment property?

SPEAKER_03:

I am not a dodgy accountant. I refuse to answer that question.

SPEAKER_00:

All right. What is a good rate of return on a rental property?

SPEAKER_03:

It really depends on what you're looking for, but the actual you're speaking to a lot of buyers' agents, they're often looking for about two and a half to three and a half percent rental yield. Anything above that tells them quite often. I know we've had properties listed in this segment that were that were allies, but two and a half to three and a half percent. Why? Because that means that there isn't an oversupply in the market. And at the exact same time, it also means that the properties have a more conditioned to capital gain, which is why most people invest in property in Australia.

SPEAKER_01:

Okay.

SPEAKER_00:

Well, that's all we have time for today. It's been a long one, but it's honestly it's been a good one. I feel like I've learned a lot.

SPEAKER_03:

Guys, if you ever need any help with your mortgage or your property inquiries or anything along the lines of that, you can visit us at www.itsimple.com.au. If you are looking to invest in property, we also have a panel of buyers' agents that we work with, and we can refer you several in the market that specialize in each particular location. For anything else, there's MasterCard. I've been Joe. I've been Michael, and we'll see you on the next episode of the Finance Show with Joe.

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Joseph Daoud

Co-host
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Michael Lozina

Co-host