Residential property still a solid asset

Why invest $750,000 in a property today

Residential property still a solid asset

Residential property – whether as a home or as an investment – has proven to be a solid asset, despite a global pandemic and economic uncertainty, said Kevin Brogan (pictured above), national director of group risk and compliance at Herron Todd White.

In HTW’s Month in Review, the firm said it asked valuers over its extensive national coverage of residential markets, “What should I buy with $750,000?”, only to find an interesting comparison across all locations.

“The results of spending $750,000 in markets as disparate as Sydney versus Warrnambool are interesting, but also obvious,” Brogan said. “While buyers can secure a four-bedroom, two-bathroom home in one of those locations, the other will barely deliver a bedsit on a busy road (no prizes for guessing which is which).”

Comparing the current results with that of its July 2020 survey also allowed HTW to see just how the market has changed over time and the security delivered by real estate investment.

“For example, in 2020, $700,000 in Western Sydney would secure a one-year-old, two-bedroom unit in Parramatta, or even a house and granny flat in St Marys, while a two-bed unit in Marrickville went for $655,000,” Brogan said. “Looking at the 2023 options and you can still buy a unit in Paramatta for $750,000, but it will be a few years older than that 2020 purchase. In Marrickville that same two-bed unit described above would be closer to $750,000 and the home in St Marys would be a small two-bed cottage in need of an upgrade.”

A similar situation can be seen in other areas. 

“In Melbourne, a new house-and-land package in 2020 would have cost between $500,000 and $650,000 in Glenroy, Fawkner and Reservoir, but in 2023 you’ll be paying above $750,000 for most detached homes and even some townhouses,” Brogan said.

“Detached two- or three-bedroom housing would have been available in Ringwood, Warrandyte, Mitcham, and Doncaster for $700,000 in 2020. A look at today’s sales suggests buying in those same suburbs with a $750,000 budget will get you a new two-bed unit in an older duplex unit. A stand-alone house will be outside your budget.”

In Brisbane, a buyer’s dollar would have gone even further, he said.

“Very desirable suburbs such as Hendra, Wooloowin, and Clayfield all had entry-level, pre-and post-war dwellings on 405 square metres in secondary positions for $700,000 back in 2020,” Brogan said.

“In 2023, a detached home for that price is pretty much unimaginable in these suburbs. An older townhouse or unit will be your options. Further out, in 2020 you could secure good quality second hand detached homes or newer townhouses in Stafford, Gordon Park, or Kedron. In today’s market, your chance of getting a detached home that isn’t small, in poor condition and/or on a main road is slim for $750,000.”

Since 2022, rents across all these markets have increased as well, with many producing a positive cashflow this year.

This all goes to show, he said, that residential property remains a solid asset – as long as buyers choose their real estate based on solid fundamentals and sound independent advice.

“History shows that those who invest $750,000 today will look back in 2026 pleased with their decision,” he said.

Use the comment section below to tell us how you felt about this.