What investing in the top performing suburbs could have earned you in the last 5 years

Ever wonder where you’d be today if you had invested in that property you were eyeing off in Byron Bay five years ago? New research from REA Group has revealed where your investment would be today if you'd invested in top ranking suburbs in 2017.

And for some suburbs, RateCity has discovered you may have been able to have added over $1 million to your portfolio.

Top performing suburbs over the last five years

They say hindsight is 20/20, and when it comes to property values over time a new report from realestate.com.au is proving this to be true. Historic data has highlighted the top performing suburbs in terms of median sale prices over the last five years across Australia.

In terms of the greatest percentage increase in median sales prices, the top performing suburb in Australia was Sunshine Beach in Queensland. Median house price sales increased by 192% since 2017, bringing its previous median price of $2.3 million up to a whopping $3.5 million.

This was followed by Berridale with 183% growth and Jindabyne with 168% growth since 2017, both in New South Wales.

But what would your return-on-investment look like if you had put $800,000 into an investment property in the top performing suburbs?

RateCity research has crunched the numbers on a hypothetical $800,000 investment in the top-ranking suburbs in terms of median sale price growth since 2017.

Return on an $800k investment in 2017 for top-ranking suburbs

Source: Based on realestate.com.au data, on a hypothetical $800,000 investment. Does not factor in purchase or sales fees, property upkeep fees, or other costs like capital gains.

Keep in mind that these are hypothetical figures based on percentage growth records for median sale prices for houses. Entry point for some houses in these suburbs may realistically be higher than $800,000. And ongoing costs like utilities, council rates, and capital gains tax would factor into the total return on investment.

But for illustrative purposes, it’s evident that the rate of return for properties in terms of value growth has been astronomical in the last five years. And this data has illustrated some interesting trends in the way that Australians have chosen to live since the pandemic began.

PropTrack economist Paul Ryan said: “Prices rose significantly over the past five years due to a combination of extraordinary events.”

“Interest rates fell to a record low as the pandemic and other shocks hit the economy. This increase in borrowing capacity, along with unprecedented preference shifts towards lifestyle locations and larger homes, pushed prices up very quickly,” he said.

“The pandemic supercharged trends towards locations such as Byron Bay and Noosa – with more remote work flexibility, demand for larger homes and, of course, the beach,” Mr Ryan said.

How investors can capitalise on high-growth areas

Just as with any investment there is no guarantee that past performance indicates future results. While the property market is considered “safe as houses” and a lower risk investment, there is no guarantee that values will continue to grow by 192% again, for example, over five years in these suburbs.

That being said, investors still looking to capitalise on high-growth areas or seek out new investment opportunities may want to know some of their best investment home loan options. And one of the ways investors may be able to bolster their rate of return is through a lower-rate home loan.

Interest-only investor loans can also be a popular option for investors aiming to keep expenses down significantly over a fixed rate period, such as five years, as by only paying interest charges your mortgage repayments are significantly lower. Although interest-only do come with their own benefits and risks, so ensure you do your research before proceeding.

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