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

A property investment adviser has recommended potential landlords looking 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 that Wesfarmers hardware giant only opened large warehouses when they were confident there would be a population increase.

“Believe it or not, Bunnings is a very smart indicator when deciding which region to invest in,” he told his TikTok followers.

‘So if Bunnings opens up in an area, there is certainly a good chance that the population in that area will increase significantly, meaning house prices are likely to do the same.’

Mr Anderson said Bunnings would conduct their demographic and economic analysis before making a business case to open a new store, based on the theory that new homeowners would buy a lot of paint to renovate or maintain a property .

“Bunnings has a very strong in-house property team who will do a huge amount of research before opening a store in any area,” he said.

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

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

Both major cities, each with more than five million inhabitants, house a larger share of the more than 400,000 migrants who move to Australia every year.

The record annual inflow of foreign immigration for this financial year is expected to exceed the Treasury’s forecast of 315,000 new arrivals in the May budget for 2023-2024.

However, rapid population growth has benefited Sydney more than Melbourne, at least in terms of property values, CoreLogic data for October shows.

The average house price in Sydney has risen 12.1 per cent since January to $1.397 million, compared to a more moderate increase of 4.1 per cent in Melbourne, bringing the average house price to $937,736.

Brisbane, which has benefited from interstate migration, has seen its average house price rise 10.3 per cent since the start of January to $860,465, in a city with 23 Bunnings stores.

Perth’s average house price has risen 11.1 per cent this year to $660,069. Bunnings has 26 stores there.

The Reserve Bank of Australia’s 12 rate hikes since May 2022 have pushed cash rates to an 11-year high of 4.1 per cent, pushing up monthly mortgage repayments by more than 63 per cent.

James Anderson, the Melbourne-based founder and director of Bluestone Property Corporation, argued that Wesfarmers hardware giant only opened large warehouses when they were confident there would be a population increase.

But landlords have been undeterred by a 2.6 per cent increase in the value of investor loans in the year to September, while funding for new home ownership loans fell by 8.4 per cent.

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

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