The Sunshine State tops the list for investors chasing yield

Queensland is shaping up as a top investment location for investors searching for a combination of high yields and growth potential.

According to Hotspotting’s Top National Yield Hotspots, regional QLD is the standout location for yield, led by Bundaberg North (6.5 per cent), Glen Eden in Gladstone (6 per cent), and Berserker in Rockhampton (8 per cent).

While other large regional centres around the country such as West Tamworth in NSW, Elizabeth Downs in Adelaide (6.3 per cent), Geraldton (7 per cent) and Bunbury (7.5 per cent) in Regional WA all show solid cash flow for investors.

Hotspotting Director, Terry Ryder, said regional areas, and especially Queensland, were increasingly becoming locations of choice for educated investors looking for cash flow and capital growth. 

“Cash flow has become increasingly important over the past two years, given the much higher mortgage repayments in play,” Mr Ryder said. 

“But strong rental yields should never be the solitary reason to invest in any location or dwelling. 

“Rather, it is imperative that investors seek out areas that also offer capital growth prospects, often due to their booming local economies across a diverse range of industries.” 

Hotspotting General Manager, Tim Graham, said Gladstone’s property market has been a standout for investors, with rental yields currently at 6 per cent.

“Gladstone has also been recording falling vacancy rates, increasing sales activity and rising rents at the same time as house price growth,” he said. 

“The region has had its share of ups and downs previously, predominantly due to a number of very large resource projects that created significant upward or downward property price pressure.

“However, today, its economy has a range of smaller projects that are spread more evenly across a range of sectors.”

Mr Ryder said Bundaberg, located between Maryborough and Gladstone in Central Queensland, was benefiting from a variety of billion-dollar plus projects in the region and currently has a rental yield of 6.5 per cent.

“The two most significant projects are the $1.2 billion new hospital as well as the $2 billion South Beach Heads residential development in Elliott Heads,” he said.

 “However, there are myriad other major residential, transport, community, as well as health and medical infrastructure projects underway that are all underpinning the region’s performance now and into the future.

“When you can purchase in a suburb such as Bundaberg North with a median house price of $405,000, annual price growth of 17 per cent as well as a rental yield of 6.5 per cent then you are buying a solid real estate asset that is primed for capital growth in the years ahead.”

Mr Graham said the Rockhampton region was another Central Queensland location that has a number of economic strings to its bow and is seeing rental yields of 8 per cent.

“Similar to Bundaberg, Rockhampton has not been resting on its laurels,” he said. 

“Rather, the region has billions of dollars of major infrastructure projects underway, including transport, defence, resources, and energy. 

“Vacancy rates are very low, plus, there has been solid price growth over the past few years, which is why there are more investors active in the region at present,” he said. 

Mr Ryder said West Tamworth in NSW was another great location for investors with rental yields of 6 per cent, which is benefiting from the region’s location within an emerging renewable energy precinct with some $10 billion worth of projects underway. 

“Tamworth has a diverse economy more generally with the top industries being healthcare, retail, education and training, manufacturing, and construction,” Mr Ryder said. 

“Its affordable property prices also mean it presents solid opportunities for investors who are seeking capital growth potential but also strong cash flow.” 

Mr Ryder said price growth over recent years, including some six per cent over the past year, was being underpinned by an influx of new residents.

“As properties in our capital cities become more expensive, we will continue to see former city dwellers seeking out more affordable lifestyles In places that also offer many of the facilities they have come to expect,” he said.

Mr Graham said with a vacancy rate of just 0.4 per cent and rental yields of 7 per cent, it was little wonder that Geraldton – about four hours north of Perth – was increasingly attractive to investors. 

“Geraldton is the largest city north of Perth and has experienced stellar economic growth over recent years – partly due to its affordable property prices,” he said. 

Mr Ryder said first homebuyers had also been targeting Withers in Bunbury in WA due to its affordable property prices, but investors were shown a keen interest as well with yields topping 7.5 per cent.

“There are very few major regions left where you can purchase a house in the $300,000 to $400,000 price bracket that also offer strong rental yields and the prospect for future capital growth,” he said. 

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.