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Regional areas record strongest rental yields

Australia’s regional areas have once again proved they are the best source for strong rental yields, with one Queensland country town recording a rental return of 11.7 per cent, according to the latest report from Corelogic.

The Corelogic top rental performers report identifies the top 100 suburbs where houses or units have an estimated gross rental yield of 5 per cent or more per annum. 

The number one location in Australia was Blackwater, a country town in Queensland, that had an 11.7 per cent rental return based on CoreLogic’s Top 100 rental performance analysis.

The town has a 0.0 per cent vacancy rate, with a median house price of $145,000 and median rent of $260 per week.

Clearly there is already investor interest in Blackwater – the median house price has increased 19.5 per cent over the past 12 months alone, indicating that strong yields have the potential to lead to capital growth.

The other top performers rounding out the top five were Broken Hill (11.7 per cent) in NSW, Woree (10.8 per cent) and Manunda (9.5 per cent) in Queensland, and Katanning (9.1 per cent) in WA.

The criteria to make it into the top 100 list required more than simply high yields. Vacancy rates needed to be below 3 per cent, while the change in median rent over the last 12 months had to be positive, and the suburb or town needed more than 20 sales in that same period of time.

With interest rates at record lows, the hunt for yield is on in earnest and is allowing for plenty of opportunities to generate positive cashflow for savvy investors.

Median house values in the report ranged from $89,483 to $521,597, and between $133,205 and $395,577 for units.

Across the country there were a number of high-yielding areas, and Queensland proved to be one of the very best hunting grounds with 42 suburbs making the list of 100.

Despite the most recent ramp up in prices in NSW and Victoria, 17 and 15 suburbs respectively made the top 100, while South Australia also featured heavily with 15 suburbs making the list.

Eight Tasmanian suburbs made the cut, while Western Australia, the ACT and Northern Territory all had only one town or suburb on the list.

The report features 63 suburbs where houses represent good rental opportunities and 37 suburbs where units offer the highest yields, while also demonstrating positive rental growth.

Generally speaking, regional areas provide strong opportunities for high rental yields, however, come at the cost of lower capital growth over a long period of time.

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