Is Lake Macquarie A Good Place To Invest In Property?
Buying an investment property is a significant and multifaceted decision. From saving the deposit to securing finance approval, the time and effort required to become purchase-ready is a mammoth task. And you haven’t even begun to search for properties yet! This article outlines all the finer details of what our local experts consider when advising our clients on whether Lake Macquarie is a good place to invest in property.
Lakeside Living Close To A Regional Powerhouse
Lake Macquarie offers a unique blend of city access with a coastal/lakeside lifestyle. Located just a short drive from Newcastle and a couple of hours north of Sydney, this area boasts a diverse economy and stunning natural beauty. The expansive lake and beautiful beaches make it a magnet for investors and owner-occupiers from Sydney and other parts of the country. Many of our clients are looking to relocate their families to Lake Macquarie for a quieter, more affordable lifestyle or downsize the family home to retire close to great amenities.
Affordable Price Points
Lake Macquarie offers a wide variety of investment brackets depending on your budget.
$600,000 - $800,000
This price point typically allows our clients to purchase three-bedroom family homes in select suburbs such as Teralba, Toronto, and Rathmines. Capital growth in these locations has ranged from 6.5% to 7.0% per annum compounded over the last decade, with rental returns around 4.1% to 4.3% per annum in the current market.
$800,000 - $1,000,000
Our recommendations shift to areas like Eleebana and Warners Bay in this bracket. Here, you can find three-bedroom homes with one or two bathrooms on quiet streets for less than $1,000,000, offering rental returns of around 3.9% to 4.1%. Growth rates have been appealing, with some suburbs compounded by 7.0% and 7.2% per annum.
$1,000,000 +
Investing over $1,000,000 in Lake Macquarie suggests a focus on high-growth assets. Freestanding houses in areas like Caves Beach, Dudley, and Redhead will likely deliver the highest returns for the lowest risk. These beachside suburbs are restricted by national parks in all directions, meaning the enclaves are likely to become more desirable as time goes on. These suburbs have seen growth rates ranging from 7.2% to 7.5% per annum compounded over the last decade, with rental yields around 3.6% to 3.9%.
Investing Under $600,000 in Lake Macquarie
While challenging, buying an investment property for under $600,000 in Lake Macquarie is possible. Typically, this budget restricts buyers to older homes needing renovation or strata options. We often recommend our clients invest in nearby areas, such as the Hunter Valley, where we typically find reasonable options. If you’re looking at this price point, please reach out, and we’ll share our advice.
Know The Local Risks
Buying property anywhere has its risks, and Lake Macquarie is no exception. Here are some specific risks to consider localised to the region:
Soil Contamination
Lake Macquarie has a history of industrial activity, which can result in soil contamination in certain areas. Lead contamination is prevalent in areas such as Speers Point, Boolaroo, and Argenton, so developing a property in these locations can come at a higher cost than in other areas. It's crucial to conduct thorough due diligence and soil testing before purchasing property, particularly in some of these older industrial zones.
Coastal Erosion
With its stunning coastline, Lake Macquarie is subject to coastal erosion. Properties near the beach may risk erosion, storm damage, and salt exposure. Understanding the local council's coastal management plans and any existing erosion issues and reviewing the materials the property is constructed from are critical steps in our due diligence procedures in these areas.
Public Housing
Like many areas, Lake Macquarie has public housing developments. Properties near densely populated public housing areas may experience higher vacancy rates and lower tenant quality, so familiarising yourself with the neighbourhood and assessing whether it meets your investment criteria is important. We, for instance, will almost certainly steer you away from purchasing in Windale if an opportunity presents itself in that suburb.
Conclusion
Lake Macquarie presents a compelling opportunity for property investors with its blend of coastal charm, affordable price points, and potential for strong capital growth. However, understanding the local risks is crucial to making an informed investment decision. If you're considering investing in Lake Macquarie, our team of local experts is here to guide you through every step of the process, ensuring you make a wise and profitable investment.
Ready to explore investment opportunities in Lake Macquarie?
