For an investment for Sydney and Melbourne, to be very general, in my opinion, you need one of two things.
A net rental yield quite a bit better than a bank account term deposit, or for capital gains to make up the difference between the rental yield and a quite a bit better than the bank account.
Why quite a bit better? Because you need some incentive to spend your time, energy and effort not to mention being exposed to some risk (no tenants for a while, termites, flood, subsidence, depreciation etc. may not be able to be covered completely by insurances)
What is quite a bit better? IMO, you would be looking for at least 8% net, so possibly north of 10% gross in a period of no capital gains in real terms. This means yearly capital gains of at least the amount of inflation required, circa 3% pa.
If more like 6%pa for cap gains, I would accept about 7% gross or about 5% net.
Since we don't even appear to have 3% PA capital growth, and average net yield seems to be below 3% in many areas in syd/mel, I would not be thinking this would be a good investment for a while.
With the baby boomer overhang there, where they will be flushed through the system from 2025 to 2030, I expect that may be a good time to start investing again, generally speaking. I will be retiring not long after that so I suspect I may never become a property investor. That is unless we have a price crash similar to OS experience, where some value may appear. I'm not holding my breath for that, I suspect we'll just have a very slow deflation of the bubble, over a couple of decades.
