The top suburbs for unit rental yield around the country, Ultimo shines
Though negative gearing has short term benefits, many investors are looking for properties that can bring them high returns for a low price.
Using statistics from RP Data, Property Observer has put together the top five suburbs for unit rental yields by state.
Rental yield, the proportion of rental income to a property’s purchase price, is one of the key indicators of value for an investment property.
Predictably, New South Wales and Queensland currently offer the best yields for units. The price pressure in the Sydney rental market is well known, and Queensland has flagged by many of our observers as the next market to watch.
However, a property’s rental yield is only one factor in its worth to you as an investor. A property may have a high yield because property prices are depressed in that area and a local economic downturn has lowered the population’s buying capacity, giving it little potential for capital growth.
Another suburb may have a low rental yield because it consistently attracts blue-chip buyers and there isn’t much of a rental market. So while searching for an apartment, remember to consider median values, location, population and the economy.
New South Wales
While Broulee has the highest rental yield for units of any suburb in Australia, it may not be the investment you’re looking for – the seaside resort town on the south coast had a population of just 2,897 in 2011.
- Broulee
Rental yield: 12.36%
Median price: $305,000 - Ultimo
Rental yield: 11.42%
Median price: $255,000 - North Albury
Rental yield: 8.52%
Median price: $116,000 - Nambucca Heads
Rental yield: 8.32%
Median price: $200,000 - Bella Vista
Rental yield: 8.13%
Median price: $381,000
Other high yielding NSW suburbs for units: Huskisson (7.49%), Lavington (7.44%), Taree (7.44%), Kooringal (7.38%), Raymond Terrace (7.21%).
Australian Capital Territory
- Bonner
Rental yield: 6.78%
Median price: $345,000 - City
Rental yield: 6.3%
Median price: $425,000 - Franklin
Rental yield: 6.29%
Median price: $310,000 - Downer
Rental yield: 6.26%
Median price: $299,000 - Lyons
Rental yield: 6.12%
Median price: $289,000
South Australia
- Risdon Park South
Rental yield: 9.83%
Median price: $86,000 - Whyalla
Rental yield: 8.67%
Median price: $168,000 - Risdon Park
Rental yield: 8.4%
Median price: $99,000 - Berri
Rental yield: 8.2%
Median price: $111,000 - Davoren Park
Rental yield: 7.89%
Median price: $129,000
Tasmania
Tasmania had the lowest rental yield for units of any state or territory. Despite offering some of the cheapest units in Australia, there isn't the rental market for units to sustain high yields.
- Brighton
Rental yield: 6.22%
Median price: $218,000 - Claremont
Rental yield: 6.02%
Median price: $186,000 - Glenorchy
Rental yield: 6.65%
Median price: $192,000 - Hadspen
Rental yield: 6%
Median price: $130,000 - Lutana
Rental yield: 5.99%
Median price: $215,000
Northern Territory
- Braitling
Rental yield: 7.23%
Median price: $302,000 - Katherine
Rental yield: 7%
Median price: $260,000 - Gillen
Rental yield: 6.93%
Median price: $315,000 - Larrakeya
Rental yield: 6.82%
Median price: $465,000 - Desert Springs
Rental yield: 6.54%
Median price: $370,000
Queensland
Queensland's rental yields outperformed most units in the rest of the country. But as we saw in New South Wales, if it looks too good to be true, it usually is. Middlemount, with a median unit rental yield of 11.97%, has a population of just 1,914 according to the 2011 census.
- Middlemount
Rental yield: 11.97%
Median price: $315,000 - Andergrove
Rental yield: 11.43%
Median price: $178,000 - Woree
Rental yield: 9.75%
Median price: $120,000 - Bungalow
Rental yield: 8.8%
Median price: $130,000 - Garbutt
Rental yield: 8.76%
Median price: $190,000
Other high yielding suburbs for units: Holloways Beach (8.5%), Manunda (8.4%), LOGAN CENTRAL (8.19%), BEENLEIGH (7.95%), Manoora (7.87%), Slacks Creek (7.87%).
Victoria
Unit yields in Melbourne have been low for some time, due to high prices in the inner city and increasing supply with new unit developments. Victoria's highest yielding suburbs are all outside of the capital city, save the northern suburb of Macleod.
- Hamilton
Rental yield: 8.9%
Median price: $129,000 - Macleod
Rental yield: 7.31%
Median price: $198,000 - Alfredton
Rental yield: 6.87%
Median price: $191,000 - Redan
Rental yield: 6.83%
Median price: $168,000 - Horsham
Rental yield: 6.68%
Median price: $179,000
Western Australia:
- Newman
Rental yield: 9.95%
Median price: $575,000 - Boulder
Rental yield: 8.9%
Median price: $175,000 - South Hedland
Rental yield: 8.39%
Median price: $558,000 - Piccadilly
Rental yield: 7.83%
Median price: $236,000 - Kalgoorlie
Rental yield: 7.74%
Median price: $235,000
Remember, while performance indicators can give you a superficial understanding of a suburb's investment value, most offer the greatest value as comparative measures.
If you're considering a property investment, look back at the yields historically found in that area to get an understanding of which way the trend is heading, compare your figures with other areas, and consider other valuation tools.
This article article has been amended to include South Australian figures.
