Why keeping an eye on where Bunnings is opening next is the key to finding a winning property investment

An investment property adviser has recommended prospective landlords wanting to make money buy a home near Bunnings – with immigration at record levels.

James Anderson, the Melbourne-based founder and director of Bluestone Property Corporation, argued the Wesfarmers-owned hardware giant only opened large warehouses if they were certain there would be a population surge.

‘Believe it or not, Bunnings is a very astute indicator when deciding what region you may want to invest in,’ he told his TikTok followers.

‘So if Bunnings is opening up in a region, there’s certainly going to be a good chance that the population’s going to increase quite a lot in that area which means that housing prices are likely to do the same.’

Mr Anderson said Bunnings would do their demographic and economic analysis before a business case was made to open a new store, based on the theory new home owners would buy lots of paint to renovate or maintain a property.

‘Bunnings has a really strong, in-house property team that will do massive amounts of research before opening up a store in any area,’ he said.

With more than 300 stores in Australia, it is by far Australia’s biggest hardware chain. 

But there are some limitations to that theory with Bunnings having 52 stores in greater Melbourne, compared with 48 in greater Sydney.

Both big cities, each with more than five million people, house a larger proportion of the more than 400,000 migrants moving to Australia a year.

The annual, record net overseas immigration intake for this financial year is set to surpass Treasury’s forecast of 315,000 new arrivals for 2023-24 made in the May Budget.

Rapid population growth, however, has benefited Sydney more than Melbourne, at least in terms of real estate values, CoreLogic data for October showed.

Sydney’s median house price has surged by 12.1 per cent since January to $1.397million compared with a more subdued 4.1 per cent increase in Melbourne, taking the mid-point house price to $937,736.

Brisbane, the beneficiary of interstate migration, has seen its median house price climb by 10.3 per cent since the start of January to $860,465, in a city with 23 Bunnings outlets.

Perth’s median house price has climbed by 11.1 per cent this year to $660,069 – Bunnings has 26 stores there.

The Reserve Bank of Australia’s 12 interest rate rises since May 2022 have taken the cash rate to an 11-year high of 4.1 per cent and caused monthly mortgage repayments to surge by more than 63 per cent.

James Anderson , the Melbourne-based founder and director of Bluestone Property Corporation, argued the Wesfarmers-owned hardware giant only opened large warehouses if they were certain there would be a population surge

But landlords haven’t been put off with the value of investor loans rising by 2.6 per cent in the year to September as financing for new owner-occupier loans fell by 8.4 per cent.

Australia’s Big Four banks are all expecting the RBA to raise rates again on Tuesday by a quarter of a percentage point, taking the cash rate to a 12-year high of 4.35 per cent. 

The 5.4 per cent inflation rate for September was still well above the Reserve Bank’s 2 to 3 per cent target.