QLD Question about yield versus capital growth

I am looking at a couple of suburbs around Brisbane. One has lower growth and yields of about 5%. The other one has higher growth and yields of 4%. For identical houses in areas that don't seem very different shouldn't the first suburb appreciate at a faster rate making the yields more comparable? I hate to chase rental yield but the 5% suburb seems so much more affordable.

 

It may well depend on the location,most of the small inner city pockets ,not to sure on the north side of the river but most on the southside ,most of the value is in a few streets and all the values span off those well know streets..Then it comes back to the ucv land values and future zoning ...imho....

 

What would make it do that? It hasn’t so far.

It’s pretty normal in real estate to have a trade off for higher capital growth with lower rental yields and vice versa.

 

Yield won't get your far..

Gotta strike the balance when building portfolio.

And depending on what stage you at and the goal, got to reverse engineer in a way..

Cheers,

 

When I think of growth, I like to consider growth of both the capital value and the rental income.

You might look at a property with a 5% rental yield on the purchase price, but don't kid yourself, it's not cash flow positive when you consider all the other holding expenses.

On the other hand, a property with better growth in rental demand might only have a 4% yield on the purchase price, but if the rent increases faster, it's going to become cash flow positive faster than the higher yielding property. You sacrifice some short term benefit for long term gain.