Why a house with more bedrooms may be a better investment
Insights from CoreLogic’s recent report, – which analyses housing market performance segmented by the number of bedrooms – highlights a growing trend among Australian renters; a shift towards properties with more bedrooms.
Potentially reflecting a trend of share houses or multiple family households, the report reveals there is an 8.7% rise in rent for houses with five bedrooms or more.
Other findings include:
- Substantial slowdown in the rent growth of smaller dwellings, with annual growth in one-bedroom units and studios slowing from 16.8% in the year to April 2023 to 7.1% in the past 12 months.
- The average rent for a bedroom becomes cheaper the higher the number of bedrooms a dwelling has.
- The national median weekly rent values hit a fresh record high of $634 per week in June, up $48 relative to a year ago.
Buying an investment property does depend on budget, but with above in mind, prospective investors may want to consider why purchasing a house with more bedrooms could be a savvy investment decision.
Understanding the demand
When investing in property, understanding the dynamics of supply and demand is crucial. As the report shows, properties with more bedrooms can attract a wider demographic, including families, groups of friends, or even professionals looking for shared living arrangements.
Another factor to consider is around remote working. The appeal for homes with adaptable spaces—like that of an additional bedroom for a home office—has surged. Buyers and renters alike are looking for properties that can accommodate these new ways of living, positioning multi-bedroom homes favourably in the market.
- Higher Rental Yields
For the investor, it’s worth noting, properties with four or more bedrooms can command higher rental prices compared to smaller ones. This is particularly true in urban centres and family-friendly suburbs, and certain school catchment areas where the demand for rental properties continues to outstrip supply.
- Lower vacancy rates
While rental yield is important, investors also need to consider vacancy rates – it’s not good having a property sat empty!
But vacancy rates do differ between the type of property; looking at the increasing demand for multi-bedroom homes, the chances are vacancy rates for this type of property will be lower.
The Real Estate Institute of NSW (REINSW) Vacancy Rate Survey results for June 2024 show the Hunter area vacancy rate increased by 0.2% to be 1.6%.
However, because of our strategies to keep vacancy rates low, we pride ourselves on generally achieving vacancy rates lower than our region’s average.
Insert your vacancy rates graph here:
Long-Term Value Appreciation
Size matters! Historically, larger homes have shown better appreciation rates over time. As land becomes scarcer in urban areas, the value of larger homes is potentially likely to increase, particularly if they are situated in desirable locations.
Having been property managers for nearly 50 years, we know what to look for, what to consider and how to maximise rental return to help you get the best from your property.
We always recommend you seek financial advice from a specialist, who can advise according to your individual situation.
While a larger property may not be in your budget, smaller properties to make good investment properties. If you’ve seen a potential investment property on the market, get in touch; we will give you an honest opinion and highlight anything you need to consider.
Drop into the Cardiff office or give us a call on 02 4954 8833 to find out more about our property management services will make your life easier.
Or send us an email at mail@apnewcastle.com.au – we’ve helped many people realise their financial dreams through property and we’re keen to help you.