According to Domain’s September Quarter Rent Report, mining towns and regional centres are delivering exceptional rental yields due to consistent demand from transient workforces and limited housing supply.
The report, supported by Domain’s Rental Estimates tool, measures rental yield as the annual income generated by a property relative to its value, providing investors with a key performance indicator.
Darwin has established itself as Australia’s high-yield capital, claiming nine of the top 10 highest-yielding capital city suburbs.
These Darwin suburbs offer median annual returns between 8.73% and 7.45%, significantly outperforming other capital cities.
Domain’s Chief of Research and Economics, Dr Nicola Powell, said the results highlight two critical factors driving strong rental yields.
“The data shows that Australia’s strongest rental yields come down to two key factors, affordability and consistent rental demand,” Dr Powell said.
She said that regional demand is often tied to major industries, particularly mining, where investors seek higher returns to offset additional risk and potentially slower capital growth in these markets.
Units are consistently outperforming houses in yield performance across all capital cities.
This trend reflects the greater affordability of units and their convenient city locations, though they typically experience slower capital growth over time.
Beyond Darwin, other capital cities are showing competitive yields in specific suburbs. Melbourne suburbs are delivering returns between 7.65% and 6.67%, while Perth suburbs range from 7.05% to 6.69%.
Western Sydney is also performing well, with yields between 6.58% and 6.05%.
Dr Powell highlighted Darwin’s unique market conditions that continue to attract yield-focused investors.
“Darwin really stands out as a landlord’s market. Its ongoing supply-demand imbalance, driven by a transient workforce and relative affordability compared to the east coast, is keeping rents high and cementing its reputation as Australia’s high-yield capital,” she said.
The Melbourne market is showing signs of renewed momentum despite recent slower capital growth.
Strong yields are attracting investor interest back to the Victorian capital, potentially signalling a market recovery.
Regional mining towns feature prominently among the highest-yielding areas nationally, with their consistent workforce demands and limited housing options creating favourable conditions for property investors seeking strong returns.
Investors looking for yield-focused opportunities are increasingly looking beyond traditional investment hotspots in Sydney and Melbourne, with regional centres and smaller capital cities offering more attractive returns in the current market.
The report demonstrates that while capital growth often dominates investment discussions, rental yield remains a crucial consideration for investors seeking consistent income from their property portfolios.
“Melbourne’s also one to watch. While it hasn’t led in terms of capital growth recently, its strong yields and renewed investor interest suggest the market could be regaining momentum,” Dr Powell said.
