Savvy investors shun Sydney and Melbourne, and look to Adelaide

Australia’s housing affordability crisis is forcing young people to take extraordinary steps – whether it’s a home a long way from the city or a tiny spot in a block of flats.

Sydney IT accounts manager Rob Cooper is one homebuyer who’s looked outside the square. He rents in Woolloomooloo but can’t afford to buy there, so he’s purchased a rental property in a trendy city suburb more than 1,000 kilometres away, in Adelaide.

The median house price in Adelaide is $455,000 compared to Sydney’s $900,000.

“So, West Croydon is the suburb. It’s about 7km away from the city and it was just under $700,000 for a three-bedroom house,” Mr Cooper told 7.30.

“I feel it’s good value for what you get and certainly has the potential to grow, which is the main thing.”

Mr Cooper is part of the generation dubbed “rent vestors” — people who rent where they want to live and buy an investment property somewhere they can afford, with the help of tax perks like negative gearing.

He bought the rental with the help of Bryce Holdaway’s property-investment firm.

Mr Holdaway, a buyer’s agent, described the purchase price as “laughable”.

“In some cases you can’t even pick up a one-bedroom apartment in the same distance, let alone a three-bedroom house on a parcel of land,” he told 7.30.

Mr Holdaway first saw an opportunity in Adelaide about 18 months ago, because homes were affordable and rental returns were good.

“The reason we went to Adelaide were the three Ls — location, land and looks,” Mr Holdaway said. “You can get terrific locations … within 5km of the Adelaide CBD that’s got a beautiful period home on a 600 or 700 square-metre land, well under $1 million.

“Being in that early part of the growth cycle, where you could pick something up that seemed ridiculously cheap by Melbourne and Sydney comparison, was really enticing.”

There is no official data to show how many homes are being snapped up by investors but according to realestate.com.au there had been more than 1 million internet searches on South Australian properties from the eastern states in the past six months alone. The number of searches from Victoria was up 68.6 per cent.

Find out more from the original source: http://www.abc.net.au/news/2017-08-01/cant-afford-sydney-or-melbourne-house-investors-look-to-adelaide/8748210

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