Naturally, investors are more likely to buy a rental property in an area where there are many people wanting to rent. Therefore, it might be expected that a higher proportion of rental dwellings than all private dwellings would be located in the capital cities. However, this was not true in every State. The relatively high proportions of people in New South Wales and Queensland living in coastal towns and cities may help to account for this difference. The value of rental properties differed from that of owner-occupied properties.
Property values vary considerably according to their location.
Unpublished data, Rental Investors Survey, June 1997. There are a number of ways in which investors can receive a return on their residential rental property. For example, the capital value of their property can appreciate over time, they can gain benefits of reduced taxation through negative gearing, and they can earn rental income from the investment. A commonly used measure of return on investments is the 'gross rate of return'. It also excludes the benefits received from negative gearing.