Despite some conflict between property experts on the current rental market in Wagga, both can agree the city is becoming “attractive” to investors.
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Domain’s data scientist, Dr Nicola Powell said that in terms of Wagga’s residential rental market, purchase price is growing at a much greater pace than rental prices.
“What this means overall is we’ve seen a bit of a deterioration in the gross rental yields in Wagga, but overall yields are still around that 4.5 per cent and even been flying around that five per cent mark, which is very attractive to an investor,” Dr Powell said.
“When you compare Wagga to say Sydney and Melbourne, in which Melbourne has the lowest gross rate yields out of all our major capital cities at three per cent.
“I think Wagga is a very attractive place for investors to look towards in terms of that cash-flow, but also that future capital growth when you look at the future prospects for this area.”
However, independent property valuer, Chris Egan argued the gross yields are higher than 4.5 per cent and that Wagga has not experienced gross yields deterioration.
“You can buy a defence housing authority house with a guaranteed 12-year rental lease with a 5.2 per cent gross yield and the average being about 5.5 per cent in other areas,” Mr Egan said.
“In smaller regional towns it can increase to six or seven per cent, but 4.5 per cent is probably a little bit low from what we’ve seen and we haven’t seen a deterioration.”
Mr Egan said that Wagga’s high “transient” population from the university and the RAAF Base means there are “really low” vacancy rates.
“It’s really easy to rent places in Wagga at certain times of the year and at peak times like when university resumes, you can get a premium rent,” he said.
While Mr Egan said that in the winter months some properties can take longer to lease, it can be “really easy” for landlords to rent their property out if they maintain their property and “inject a bit of capital” in them.
“In winter it can take a bit longer, but talking to real estate agents it’s a one to two per cent vacancy rate for residential properties across the city,” he said.
Mr Egan said this all stems back to supply and demand and with the current proposals for population growth and increasing businesses by the council and Committee 4 Wagga, the city’s northern suburb booms and constant demand for land spaces, there doesn’t seem to be a decline in the near future.
“If the population decreased and housing stock increased, that’s when it can lead to deterioration because tenants can be pickier and there’s not enough people going into homes,” he said.
“It’s all about risk and reward and I think the larger regional areas of NSW are a good place for residential investment, you’re going to get a higher investment with commercial or industrial but they're perceived to be slightly riskier and could have a longer vacancy.”