Best Suburbs to Invest in Port Stephens

24 June

Port Stephens is a coastal region that offers far and away the best locational lifestyle North of Sydney (we may be a little biased). Port Stephens is a dream come true for coastal lifestyle enthusiasts and tourists alike, from surf-filled coastlines to lagoon-like bays. Not only that, but the peninsula is home to one of the fastest-growing retiree populations in Australia. This huge migration to the area is seeing it shift from a coastal hub to a regional hotspot.

With these shifts comes significant opportunity for the savvy investor. We’ve asked our local experts where they invest their clients' money, breaking down options by price brackets to help you find the perfect match for your budget and investment goals.

Investment Fundamentals

Before going shopping, highlighting some of the fundamental attributes of an outperforming property, no matter the location, is critical. These general rules of thumb ensure we aren’t buying just an average property for our clients but instead finding the best-performing properties on the best streets.

Focus on Scarcity: Look for properties that are hard to replicate in areas with little to no vacant land for future building. This is typically a character-filled home in an established suburb with no available vacant land.
Understand Owner Occupier Appeal: Nearly 70% of the purchasers are owner-occupiers. This means most of the market buys with emotion rather than a calculator. Rather than focusing specifically on the spreadsheet, get a feel for the property you’re buying. If you think the bedrooms are too small, so will your tenant and future buyer.
Buy on the North Side of the Street: Most people understand this, but only unconsciously. Buying on the north side of the street opens the property up to more natural light, making the property more desirable to live in. It is something hard to put your finger on while you’re in the property, but it will leave a lasting impact on your impression of value.

These are the aspects we assess when reviewing properties on behalf of our clients, along with over 20 other checklist items. This ensures you buy an above-average property in your chosen suburb.

So where should you look?

$600,000 - $800,000

Lemon Tree Passage: Salamander Bay is an excellent choice for investors with a budget of $600,000 to $800,000. This suburb offers three-bedroom family homes in quiet streets, and capital growth has ranged from 6.4% to 6.7% per annum over the last decade. Rental returns in Lemon Tree Passage are around 4.0% to 4.3% per annum, and the typical property type is likely to be an 80s-style brick and tile. Ideally, find properties closer to the waterfront for higher growth potential.
Raymond Terrace: Raymond Terrace provides similar investment opportunities within this price bracket. With strong community amenities, schools, and parks, Raymond Terrace attracts families, ensuring steady rental demand. Capital growth here has also been in line with Lemon Tree Passage at around 6.4% to 6.7% per annum, although it’s key to focus on family-friendly sections of the area to avoid high tenant turnover. Rental yields in Raymond Terrace typically range from 4.1% to 4.3%.
Medowie: Medowie offers investors affordable family homes with good returns. Its proximity to shopping centres and medical facilities makes it desirable for renters. At this price bracket, we’re likely to find the older style homes closer to the neighbourhood shopping centre on Ferodale Rd rather than homes in the new housing estates. This gives you a higher likelihood of positive capital growth in the future as the properties tend to be surrounded by established dwellings rather than vacant blocks of land. Over the past ten years, capital growth has been consistent at approximately 6.2% to 6.6%, making it a reliable choice for property investment. Rental returns in Medowie are around 4.0% to 4.2%.

$800,000 - $1,000,000

Anna Bay: When the budget pushes closer to the $1,000,000 mark, Anna Bay is certainly on the radar. It’s another highly desirable suburb known for its stunning beaches and vibrant community. Investors here can expect solid capital growth depending on proximity to the coastline and a slight haircut on rental yield, typically around 3.8-4%. Anna Bay’s coastal location and desirable lifestyle make it a top choice for long-term investment, with capital growth rates between 6.8% and 7.0% per annum.
Nelson Bay: Nelson Bay is another attractive option for those with a higher budget. Known to be the ‘centre’ of Port Stephens, it boasts the D’albora Marina, shops & café’s along Magnus Street and the best chicken schnitzel in the region at the Sea Breeze hotel. The suburb offers three-bedroom homes with one or two bathrooms on quiet streets within (a decent) walking distance to the marina for under $1,000,000. These properties make great investments with rental returns in the vicinity of 3.8% to 4.0%, and historical capital growth between 6.9% and 7.1% per annum.
Corlette: Known locally for its proximity to the Salamander Bay Shopping centre & the Vantage Estate (where beautiful, non-waterfront properties have sold for over $2,000,000), Corlette is a strong contender for investment interest. This suburb offers freestanding houses on quiet, tree-lined streets such as Saratoga Ave, . With growth rates ranging from 6.9% to 7.2% per annum over the last decade, Corlette provides the highest returns for the lowest risk in this price bracket. Rental yields in Corlette are around 3.7% to 3.9%.

$1,000,000 +

Shoal Bay: Shoal Bay has seen a significant disparity in property values compared to its neighbouring suburbs. This is partly due to the small number of homes, which adds to the area's exclusivity. Coupled with a beautiful waterfront along Shoal Bay, you’ve got a recipe for strong buyer demand and, therefore, price growth. The general area is home to a number of holiday-maker-style accommodations; however, long-term rental yields can be found in the vicinity of 3.7 - 3.9% per annum, and capital growth has been around 7.0% to 7.3% per annum across the last 10+ years.
Fingal Bay: Fingal Bay provides an excellent investment opportunity with its blend of older character homes and newer developments. There are restrictions on future development due to being almost exclusively surrounded by national parks. The suburb’s appeal lies in its family-friendly environment and coastal lifestyle. While considered ‘hard to get to’ for some, this adds to the allure for others, being one of the quietest areas during the whole Port Stephens peninsula holiday periods. Fingal Bay has seen capital growth of around 7.1% to 7.5% per annum and offers approximately 3.6-3.8% rental returns.
Soldiers Point: Soldiers Point is perfect for investors looking for high-growth suburbs. With its mix of modern and older homes, Soldiers Point attracts a diverse range of tenants. The capital growth rates here have been between 7.4% and 7.7%, with rental yields around 3.6 - 3.8%.

Investing Under $600,000 in Port Stephens

While challenging, buying an investment property for under $600,000 in Port Stephens is possible. This budget typically restricts our clients to strata options. Where this is the case, our team is always very selective in choosing appropriate assets for the investment strategy. As a general rule, avoid any medium-density apartment buildings and always review the strata report to determine future costs before committing to a purchase.

Conclusion

Port Stephens offers a range of suburbs suitable for various investment budgets, each with unique benefits and growth potential. From affordable family homes in Lemon Tree Passage and Raymond Terrace to high-growth opportunities in Shoal Bay and Soldiers Point, there’s a suburb to match every investor’s goals. Understanding the local market and choosing the right suburb is key to a successful investment.

Ready to explore investment opportunities in Port Stephens?