Property Point

If the Mackay real estate market were by itself at a school dance or sitting solo at a busy bar, there would be a line-up of suitors asking for a dance or offering to buy drinks.
Mackay Market would be dressed nicely, nothing flashy or ostentatious, and would not be part of the boisterous “in-crowd” that likes being the centre of attention.
But the conga line of admirers would be dizzy with delight at the very sight of this attractive, although slightly distant beauty.
The admirers would be swept off their feet by something so alluring yet strangely accessible.
They would compare the situation in other bars they have been to … those expensive ones in Sydney and Melbourne that are full of pretentious, stuck-up types who wouldn’t give you the time of day.
“No, Mackay Market is different to the others. I don’t have to be a millionaire to get noticed. And Mackay Market seems available, open to offers,” they would observe.
For a southern real estate investor, the Mackay real estate market is all those things: attractive, geographically distant, alluring, accessible and available.
The key driver is the price of real estate and the rental returns.
There are other factors that are important and are definitely part of the equation for southern investors: low rental vacancies, relatively high average incomes, low unemployment, lots of work opportunities, a good standard of health, education and sporting facilities and the outdoor lifestyle that attracts and keeps people here.
Demand and supply is, as always, a key factor. Mackay has an under-supply of properties and an over-supply of buyers and renters.
But once all those boxes are ticked for investors, the one biggie is rental yield; the return on investment. The simple question for investors is: How much does it cost and how much rent do I get?
I have a client who has a property in a large city down south. The house is worth $1.1-$1.2 million. She gets $650 a week rent … and that’s after a recent increase.
In Mackay, you would expect to get that same amount of rent, $650 a week, for a property worth about $500,000. So, the same rent for less than half the purchase price.
If an investor buys a Mackay property for $500,000 and rents it out for $650 a week, the gross yield is 6.76 per cent. The net yield, with costs for rates and insurance included in the calculation, is about 5.2 per cent depending on those costs.
A recent assessment of rental yields across the country came in with a gross average yield of 3.5 per cent to 4.5 per cent and a net yield of 1.5 per cent to 3.5 per cent. Sydney’s gross rental yield is about 2.6 per cent and Melbourne’s is about 2.95 per cent.
I know none of this will bring comfort to local buyers who are finding it increasingly difficult to get into the market but, rather than trying to rub it in, I am seeking to explain what is happening and help local buyers plan their buying strategy.
But locals should remember we are still priced well below the national median price. Instead of having to come up with well over $800,000 around the nation, in Mackay the median is around $500,000.
And first home buyers should bear in mind that a unit is a lot cheaper than that. You can still buy a decent two-bedroom unit for the high-$200,000s to mid-$300,000s depending on the location and features. That’s an affordable way of breaking into the Mackay market that is definitely not available in other big-city markets.
Uh oh, someone’s over in the corner flirting with Mackay Market again.

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