Property investors urged to turn to Western Sydney for bigger returns

New apartments

The past year has seen regional home values grow twice as fast as capital cities, as more and more Australians sought for a sea or tree change, according to CoreLogic. But new figures suggest there may be affordable pockets of Sydney that are even more promising for property investors

According to property developer ALAND, the Greater Western Sydney market could be very profitable for investors, with rental gross yields potentially as high as 4.7% at its Schofield Gardens development in Schofields. 

For context, rental gross yield refers to your annual rent income divided by the purchase price, so it’s a way to figure out how likely the property will generate a positive cashflow. 

ALAND said investor returns were lower in popular regional hotspots such as Wollongong, Newcastle and Central Coast. Here are their estimates of rental gross yields in these areas, drawing on data from My Housing Market:

AreaMedian asking property price (May)Median asking rent priceMedian gross rental yield
Wollongong$750,000$530 per week3.7%
Newcastle$650,000$460 per week3.7%
Central Coast$546,500$470 per week 4.5%

“What Sydney property investors don’t realise is that they can make much more money in their own backyard than they can in regional areas, while taking advantage of what will probably be much higher capital gains,” ALAND’s sales director, Mark Bernberg said.

And it seems that investors are catching on, with ALAND saying that it has witnessed a surge in sales in its Schofields and Liverpool developments amid the current property boom.

In fact, according to UNSW research published last year, over 80% of investors who bought in western Sydney said they were attracted by the market’s “perceived potential for capital gain”.

Meanwhile, first-time investors were more likely to be motivated by the “affordability” factor:  more than two-thirds said their decision to purchase a western Sydney property was primarily based on the notion that it’s cheaper than the rest of the city. 

However, not everyone is convinced that Western Sydney is the best place to invest. 

Earlier this year, Domain reported that Sydney’s worst-performing areas over the past five years are largely units in the western suburbs. Median unit prices fell by 19.3% in Harris Park, 13.6% in Merrylands and 13.4% in Granville between December 2015 and December 2020. 

This is partly due to the sheer number of developments being constructed. For instance, the Department of Planning forecasted that while the inner city and eastern suburbs are expected to build less than 10,000 homes in total by 2025, the City of Parramatta alone is set to have another 15,450 new homes, the City of Blacktown another 16,950 and the City of Cumberland another 10,200.

Need more help with deciding whether to buy a house or a unit? Check out our guide about the pros and cons of apartment living

Or if you’re ready to shop around for an investment loan to fund your property, scroll down below for a list of offers.

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can compare more home loans here.
Last updated 30 October 2024 Important disclosures and comparison rate warning*

Investment property loan comparisons on Mozo

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Express Home Loan

    • Investment
    • Principal & Interest
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

  • Fixed Express Home Loan

    • Investment
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Fixed 2 years
    Comparison rate
    6.43 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    Enjoy a fast online application process with the Bendigo Bank Fixed Investor Home Loan. 100% offset account included. Principal and interest or interest only repayments available. Access additional repayments using online redraw. For investors only.

image of houses

Need help with your Home Loan?

Whether you're looking to purchase a new home or refinance your existing loan, our friends at Lendi can help! Lendi’s expert advice is completely free of charge.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.