Last Updated: 25 Jan, 2022
Investing in property is a long game. But you don’t necessarily have to wait until sale time to see a return. That’s the case with positive gearing.
While only 40% of residential properties in Australia are positively geared, the tide is shifting. More investors are drawn to the idea of stable rental income, especially first-time investors.
With more scrutiny of negatively geared properties, there’s no wonder investors are on the hunt for the best positively geared suburbs in Australia. So, let’s cover off the best suburbs for positive gearing you need to have on your radar.
What is positive gearing?
Let’s start with the basics. Positive gearing is an investment strategy where you rental property earns more income than it costs in expenses to run it.
Take this example: say you’re charging $600 per week in rent and spending only $350 per week in expenses. You’ve scored $250 in positive cashflow each week, and a positively geared property.
So, what do you need to weigh up when deciding whether or not to positively gear your real estate property?
The pros of positive gearing:
- You’ll score positive cash flow and profit in your back pocket on a regular basis
- It makes it easier for you to score a loan to grow your property portfolio
- It offers financial security and means you’ll never be short if unexpected expenses crop up
The cons of positive gearing:
- You can miss out on tax benefits and may need to pay taxes on their source of rental income
- It can be tricky to see capital growth from positively geared properties
- You’re likely only going to make a slim profit on your rental income (in some cases as little as $50 per week)
The signs of a positively geared suburb
Before we dive into the top positively geared suburbs to watch in 2022, let’s walk you through what signs show you’ve found a positively geared suburb.
Typically, positive gearing was only positive in regional postcodes where property prices have been historically lower. But that’s changing thanks to the regional property boom.
Now, the outskirts of capital cities and even some coastal spots are offering the potential for positive gearing.
In a nutshell, the signs that indicate a suburb offers positive gearing potential include:
- Affordable house prices: to score positive cash flow, it’s important to keep costs down. With lower mortgage repayments, you’re more likely to make a profit on your rental income.
- High demand for rentals: the more competitive the market, the more power you have as a landlord to charge a premium for rent (which can help you score positive cash flow from your property, too).
- Low vacancy rates: lost rental income is a big expense, so low vacancy rates mean the suburb has a good chance of helping you score positive cash flow.
Positively geared suburbs to watch in 2022
1. Clarkson, WA
⭐️ The positively geared suburb to invest in if: you’re a first-time investor on a budget.
Nestled in the northern suburbs of Perth is Clarkson. It might have only been developed in the early 1990s, but Clarkson has seen exponential population growth from 1991 to 2011.
Today, it’s home to its own railway station, shopping centres, plenty of schools and parks, making it popular among young families.
Affordable property prices in Clarkson make it a hot spot for investors wanting to follow a positive gearing approach, especially for first-time investors. Typically, investors score a median rent of $400 per week (higher than the national average of $395).
Let’s break down the latest stats on the positively geared suburb of Clarkson:
- Median sales prices in Clarkson: $375,000 for houses and $250,000 for units
- Average rental yield in Clarkson: 5.0% for houses and 6.7% for units
- 5 year compound growth rate in Clarkson: -2.4% for houses and -5.4% for units
2. Craigieburn, VIC
⭐️ The positively geared suburb to invest in if: you’re looking to attract young families and professionals.
Situated in the outer-northern suburbs of Melbourne is Craigieburn. Boasting large affordable homes, plenty of amenities and close proximity to the trendy cafes of Brunswick, Craigieburn is a positively geared suburb populated by young families as well as couples.
Just 25km north of the CBD, this suburb offers easy access to the city, making it popular among a wide pool of tenants (with a low vacancy rate of just 1.35%), often taken care of by experienced property managers in Craigieburn.
For investors, affordable prices and strong demand among tenants make Craigieburn the perfect fit for a positive gearing strategy.
Let’s break down the latest stats on the positively geared suburb of Craigieburn:
- Median sales prices in Craigieburn: $595,000 for houses and $400,500 for units
- Average rental yield in Craigieburn: 3.5% for houses and 4.5% for units
- 5 year compound growth rate in Craigieburn: 8% for houses and 2.8% for units
3. Largs Bay, SA
⭐️ The positively geared suburb to invest in if: you’re looking for an affordable coastal investment property.
Just a 30-minute drive from the Adelaide CBD you’ll find Largs Bay, a great seaside suburb in South Australia. Locals love to call Largs Bay home thanks to its beachside location, beautiful old houses and boutique shops and cafes.
And Largs Bay is also a hot spot for investors, too. The suburb has shown strong rental yields and lower property prices than most suburbs in the area.
Let’s break down the latest stats on the positively geared suburb of Largs Bay:
- Median sales prices in Largs Bay: $674,000 for houses and $370,000 for units
- Average rental yield in Largs Bay: 3.5% for houses and 4.0% for units
- 5 year compound growth rate in Largs Bay: 7.9% for houses and 3.2% for units
4. Glenorchy, TAS
⭐️ The positively geared suburb to invest in if: you’re looking for solid rental returns and high capital growth.
Located in the middle-ring of Hobart is the positively geared suburb of Glenorchy. Being just 8km from the Hobart CBD makes this suburb popular among young families and professionals, with plenty of local amenities (from shopping centres to cafes).
What makes this spot such a winner for investors is its affordable median house price (as low as $391,000 for an apartment), which could potentially generate an annual profit of $3,900.
Plus, Glenorchy is also showing strong capital growth rates (one of the highest in Australia), meaning investors could score an extra return when it comes time to sell.
Let’s break down the latest stats on the positively geared suburb of Glenorchy:
- Median sales prices in Glenorchy: $490,000 for houses and $391,000 for units
- Average rental yield in Glenorchy: 4.8% for houses and 5.1% for units
- 5 year compound growth rate in Glenorchy: 12.5% for houses and 12.2% for units
5. Muirhead, NT
⭐️ The positively geared suburb to invest in if: you’re looking for strong rental yields.
You’ll find Muirhead in the northern suburbs of Darwin in the Northern Territory. It’s a family-friendly neighbourhood with plenty of local schools, parks and amenities in the area.
For investors searching for positively geared suburbs, Muirhead’s affordable property prices and strong rental yields are a winning combination.
Take this example: purchasing a property for $513,750 in Muirhead with a 10% deposit could see you earn a pre-tax annual profit of $9,700.
Let’s break down the latest stats on the positively geared suburb of Muirhead:
- Median sales prices in Muirhead: $550,000 for houses and $563,000 for units
- Average rental yield in Muirhead: 6.4% for houses and 5.7% for units
- 5 year compound growth rate in Muirhead: 10.1% for houses and -2.2% for units
6. Ridleyton, SA
⭐️ The positively geared suburb to invest in if: you’re looking for a secure investment with a low chance of vacancy.
Situated in the inner northern suburbs of Adelaide in Ridleyton. Just 5km to Adelaide CBD, this well-connected suburb offers excellent public transport and a great neighbourhood filled with pubs, supermarkets and restaurants.
As for investors, Ridleyton offers a solid median weekly rent of $440. Plus, with a low vacancy rate of 0.66%, it’s easy to keep expenses down when investing in Ridleyton.
Let’s break down the latest stats on the positively geared suburb in South Australia of Ridleyton:
- Median sales prices in Ridleyton: $562,500 for houses and $540,944 for units
- Average rental yield in Ridleyton: 4.3% for houses and 4.0% for units
- 5 year compound growth rate in Ridleyton: 3.2% for houses and 5.4% for units
7. Frankston North, VIC
⭐️ The positively geared suburb to invest in if: you’re looking for one of Melbourne’s best positive cash flow suburbs.
Located 38km south-east of the Melbourne CBD is Frankston North. With affordable property prices, big blocks of land and easy access to public transport, the suburb is a winner for families and young professionals alike.
Plus, Frankston North’s solid rental yield rates make it one of Melbourne’s better cash flow suburbs, and with a boom in property management in Frankston North, this positively geared suburb needs to be on your radar.
Let’s break down the latest stats on the positively geared suburb in VIC of Frankston North:
- Median sales prices in Frankston North: $547,500 for houses
- Average rental yield in Frankston North: 3.5% for houses and $4.3% for units
- 5 year compound growth rate in Frankston North: 11.0% for houses and 7.2% for units
8. Charnwood, ACT
⭐️ The positively geared suburb to invest in if: you’re looking for a standalone home with strong rental yields.
In the north-west of Belconnen is the suburb of Charnwood. The suburb has been a hot spot for first home buyers and renters due to its low prices and welcoming community spirit.
What makes this spot particularly attractive to investors is its abundance of detached houses. The stats show that investors can score a potential profit of $4,200 from a 10% deposit in Charnwood, one of the strongest potential cash flows for detached homes.
Let’s break down the latest stats on the positively geared suburb of Charnwood:
- Median sales prices in Charnwood: $565,000 for houses
- Average rental yield in Charnwood: 4.65% for houses
- 5 year compound growth rate in Charnwood: 39.51% for houses
9. Auburn, NSW
⭐️ The positively geared suburb in NSW to invest in if: you’re looking for an affordable positively geared apartment.
Just a 30-minute drive to the Sydney CBD is the multicultural suburb of Auburn. This is a family-friendly suburb, with plenty of shopping centres, schools, cinemas and even the lush Auburn Botanic Gardens nearby.
This neighbourhood is a must-see for investors looking to secure an affordable apartment with a solid rental yield in this middle-ring suburb., with a rise in property management in Auburn you even have the option of letting professionals ensure your steady returns.
Let’s break down the latest stats on the positively geared suburb of Auburn:
- Median sales prices in Auburn:$985,000 for houses and $529,000 for units
- Average rental yield in Auburn: 2.4% for houses and 3.9% for units
- 5 year compound growth rate in Auburn: 2.7% for houses and 0.2% for units
There’s plenty of reasons why investors search for positively geared properties, and growth suburbs across Australia. They offer stable rental returns, meaning you’ll be able to score extra cash in your back pocket. The key to finding these properties is to look for suburbs with affordable property prices, low vacancy rates and high demand for rentals. This approach will help you keep your expenses down so you can generate positive cash flow.
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