An analysis conducted on TripAdvisor’s list of top destinations for 2014 has shown some of the most popular holiday locations return the lowest rental yields.
One of Australia’s largest comparison websites, finder.com.au, is warning property buyers to look beyond the most popular travel destinations highlighted in TripAdvisor’s Travellers’ Choice 2014 Top 10 Destinations – Australia.
According to finder.com.au, Sydney made the top of the most popular travel list again this year. However, a median house price in the CBD of $1.75 million, coupled with an average rent per week of $1,120, left it with the second-lowest yield of just 3.33 per cent.
In contrast, some of the holiday destinations at the bottom of the TripAdvisor list had among the highest investment returns.
For example, Darwin was at the bottom of the TripAdvisor list, yet it ranked the second highest yield for units, at 6.82 per cent, according to finder.com.au.
Finder.com.au money expert Michelle Hutchison said it’s important to take off your “holiday glasses” when assessing potential investment properties.
“Out of the top 10 most popular holiday destinations in Australia, some yields were less than half of others on the list, with yields ranging from 2.41 to 6.31 per cent for houses and 5.33 to 7.77 per cent for units,” she said.
“By doing your research on the most popular destinations and making an informed decision, property investors could be making more than twice the amount of yield per year,” she added.
Cessnock, NSW, was voted into the TripAdvisor list this year, placing at number six, and with the lowest median house price it returned the highest yield for houses, at 6.31 per cent.
For units, Port Douglas in NSW hit the top spot for the second consecutive year, with the lowest median unit price and highest yield of 7.77 per cent.
Finder.com.au pointed out another interesting finding, with some of the highest performing investment property hotspots on the list for houses appearing bottom of the list when it came to units.
For example, although Cessnock ranked the highest yield for houses (6.31 per cent), it came in at ninth place for units, with a yield of 5.81 per cent.
Hobart was also a high performer for houses, ranking number three with a 4.83 per cent yield, but it was last on the list for units, with a yield of 5.33 per cent.