Cairns, outer Brisbane or outer Sydney

[doozer]

Seeking advise from the very knowledgeable Forum users.
We have moved from Brisbane to Cairns for work purposes for minimum 3 yrs. We are currently renting but are wondering whether we should:
1) Buy a property (preferably a house) & rent it out for 6 months as we are on a lease until July 11, then move in, do some basic cosmetic renos then rent out again if we move again. Possible rent received initially will be about $290p/w. Looking at purchase price of between $290k-$305k, good properties in good locations at this price are moving quickly.
2) OR buy an investment property in outer Brisbane/Ipswich, prob a townhouse type place in Springfield or Burpengary which I am familiar with. Looking at fairly new properties renting at $300 p/w or more
3) OR Buy an investment property in western Sydney preferably a fairly new unit renting at $300 or more.


With options 2 & 3 we would obviously have to keep renting for our time in Cairns. The market here is very flat (for sellers and landlords) and appears a good time to buy however I don't see much pulling the market out of the slump for the next while or so.


I realise capital markets generally do much better for capital growth than regional areas but we are seeking some opinions as

Suggestions?

 

[recruit2]

I think with Cairns it is likely to stay in a slump for another few years, so for a while it would just be holding costs and no return on the investment. But if you need a place to live anyway up there, I can't see Cairns getting too much cheaper than it currently is. Compared to the rest of the country, Cairns represents awesome value at the moment, particularly considering the natural beauty and location.

I can't see another GFC on the way any time soon i.e. it can't get too much worse for the rest of the world, all that is going to happen is that the rest of the world will slowly further recover, therefore over time more and more tourism will make its way into Cairns, pushing prices back up strongly. And so if you buy into that depressed market now, you should do well if you just hold the property because you need to live there anyway. Further, the capital gains will be all CGT free because it is your PPoR.

You can dabble in western Sydney and the like, but the markets aren't as depressed as Cairns and with the current mood of rising rates looming and it being a mortgage belt area, I can't see the same potential for strong growth around the corner in the present market as Cairns has. I mean there are 2 bed units in Cairns right now going for very low 100's, it seriously can't get much more undervalued otherwise the places will be basically free

When you look at so many parts in the rest of the world, Cairns is a lovely paradise and over time in future years, that will become more and more scarce with people wanting to live in those kind of locations, where as with Sydney you have the other trend starting to occur where people may be looking to get out of Sydney and move into regional areas because they can get a lot more house for the same price as a crappy unit in Sydney. We are also in this new era where there will start to gradually be more and more workers employed but living remotely, i.e. working over the internet, so I can only see regional areas growing more than they traditionally used to, thanks to technology and National Broadband Network in years to come.

That said, I am not saying that units in Sydney are a bad investment at all. But I see the currently depressed market in Cairns as a better opportunity, particularly if you need a PPoR to live in anyway. The cheap Cairns units can have quite high fees which gobble up the yield as a pure IP, but for a PPoR I reckon you should consider picking up a lovely house that's really undervalued from a very motivated vendor who just wants to offload it. Put in some ridiculously low offers and see who bites.

 

[doozer]

Thanks for that thought provoking response recruit2. We are trying to stick to a budget of around 300k for a 3-bedroom house, and are trying to stick to the golden rules of IP - as new as possible, in growth areas, surrounded by quality homes, appealing to tenants, close to the amenities - AND meet our needs for a potential PPoR, however finding that property has been difficult.

The best we can find is an 18-year old house in a more established area, surrounded by majority of owner-occupier properties - and 200 metres away from 500k+ properties.

The reason I ask about SEQ and Sydney IPs is that other IPs in these areas are performing well and given there is still plenty of growth ahead, they seem too good to dismiss from consideration.