For property investors, rental yield is a key metric that can make or break an investment decision. But with different cities and regions offering varying returns, where should you be looking for the best opportunities? We’ve broken down rental yields across Australia’s major cities and regional hotspots to help you make informed choices.
What Drives Rental Yields?
Several factors influence rental yields, but three stand out:
- Location & Tenant Profiles: Properties near business hubs, public transport, schools, and universities attract more tenants, and when rental demand exceeds supply, it can result in higher yields, particularly in areas with moderate property prices. Knowing the local demographics—students, professionals, or families—can help pinpoint high-yield opportunities.
- Vacancy Rates & Tenant Profiles: Areas with low vacancy rates and stable tenants tend to offer stronger yields due to increased rental prices.
- Property Type: Recent CoreLogic data reveals that, in the capital cities, apartments generally offer higher yields than houses, although this can still vary depending on the local market dynamics.
How Do Capital Cities Stack Up?
Comparing house rental yields in the top Local Government Areas (LGAs) per State, as of October 2024, Perth LGA led with a solid 5.7%, followed by Playford LGA (SA) at 4.7% and Glenorchy LGA (TAS) at 4.5%. NSW's Camden LGA rounded out the list at 3.5%. The narrow 2.2% difference between the highest and lowest rental yields suggested a relatively stable market across urban markets.
Unit rental yields in the top City LGAs per state were outperforming houses, with Kwinana LGA (WA) leading the way at 7.3%, closely followed by Melbourne LGA at 6.7% and Adelaide LGA at 6.0%.
Regional Areas: The Real Standouts
Regional areas' house rental yields showed similar numbers as capital city areas, with Bunbury LGA (WA) and Mackay LGA (QLD) leading at 5.7%, and Mildura LGA (VIC) at 5.4%.
For units, the top regional performers included Mackay LGA (QLD) at 6.9% and Dardanup LGA (WA) at 6.5%. This was followed by Mildura LGA (VIC) at 5.8%
Final Thoughts
Maximising rental yields involves more than just location. It's essential to factor in capital growth, economic trends, and market conditions.
A good investment strategy relies on thorough research, careful analysis, and adaptability to changes. Understanding yield patterns across Australia provides valuable insights for informed decision-making.
Key Takeaways:
- Location, tenant demand, and property type are important factors influencing rental yields.
- Units in both capital cities and regionals were delivering higher rental yields than houses.
- WA LGAs were at the top for both house and unit rental yields within capital cities, with Perth at 5.7% for houses and Kwinana at 7.3% for units.
