I was recently reading the latest Residex Best Rent Report, which was released a couple of weeks ago. There are some notable suburbs in the report showing amazing yields – in fact one suburb in South Australia has a rental yield of over 7% – but the predicted capital growth is not that hot.
That got me thinking… I am often asked what is more important – cash flow or capital growth?
Capital growth versus cash flow has been a hotly contested topic in property investing since the year dot and most people stand firmly in one camp or the other. On the other hand, I have always considered that both are important. After all, if I can achieve both then this allows me to build a portfolio without having large out of pocket expenses each month.
It was only about 18 months ago that the housing market was full of gloomy news. Many of the worst performing areas in Australia were on the Gold Coast where there was a significant oversupply of stock and values had fallen by amounts not seen since the Great Depression.
Things in the financial world and the Australian housing market are looking fine and I am pleased to be delivering a positive newsletter. The Westpac Melbourne Institute Index of Consumer Sentiment rose from 108.3 in February to 110.5 in March. This follows the 7.7% jump in the Index which printed in February and marks the fifth consecutive month that it has registered above 100. Much of the population is feeling positive about the current situation.