Now is the best time to find higher yielding properties in Rockhampton and Gladstone: HTW residential

In the Rockhampton region, yields have always been a strong consideration for the investor market as the region does not suffer the significant price fluctuations of the larger city markets, according to the latest Herron Todd White (HTW) residential report. 

The valuation firm took a look at rental yields across the nation. 

"Any capital gain to be had in our region is therefore a long-term commitment. A high grossing yield provides the incentive to remain in the market," the valuation firm said. 

"On the other hand, most investors coming into the Gladstone market are more looking for short to medium term capital gains, especially given the timing of the current market cycle.

"The current state of the Rockhampton and Gladstone markets is considered to be at the early stages of recovery, so typically now is the best time to achieve a higher yielding property while values remain at an affordable low and rents are starting to creep up after a consistent tightening trend of vacancy rates over the past 18 months to two years."

Across the Rockhampton and Gladstone regions, the type of investor varies greatly from the typical mum and dad investor who may have one house other than the family home, through to interstate investors who invest significantly in the region via the purchase of multiple dwellings or sets of flats.

Whilst rarely seen, there is also a small degree of foreign investment.

"The emergence of the Rockhampton Riverfront precinct over the past ten years has also provided the opportunity to hold a holiday unit and receive the higher return over peak periods, or the benefit of a dual key arrangement, although there is a limited market for fully serviced apartments in our region," the valuation firm added. 

Gladstone has a significant supply of inner city apartments operated as serviced apartments aimed mainly at corporate travellers as well as tourists.

Non-traditional income producing properties (such as Airbnb) are less common regionally, with little evidence available to determine a yield.

There are however the occasional peak periods where traditional short-term accommodation cannot cater to the market, such as during the Beef Australia events held every three years, where Airbnb is extremely effective, however this is not an ongoing source of income throughout the year.

In the residential space, it is unlikely that a standard suburban home would attract what investors would consider to be a high yielding return on investment, depending on the location.

The report notes a typical 10 year old, four-bedroom home that may sell for $470,000 may only provide a gross yield in the order of 5% to 5.5%. This type of yield reflects the low-maintenance nature of the property.

An entry level home in the older, established areas of Rockhampton will be more attractive if assessed on a yield basis only, for example a 1940s high set three-bedroom fibro home, not directly flood affected (becomes isolated during flood periods) may sell at around $160,000 and provide a gross yield somewhere between 7% and 8%.

Whilst this may be more acceptable to most investors, there is likely to be higher levels of expenses involved with maintaining the property which would affect achievable rental income.

"Gladstone properties reflect similar yields, however the price points differ slightly," the valuation firm said. 

A typical five to 10 year old, four-bedroom home in Kirkwood or New Auckland would sell for around $300,000 and would reflect a gross yield in the order of 5% to 6%.

An older 1960s high set, three-bedroom home in a central suburb such as West Gladstone or South Gladstone would typically sell for around $200,000 and provide a gross yield somewhere between 6% and 8%.

The best high yielding property type in our region is flats or multiple properties on one title.

Due to the multiple occupancy nature, the income generated is often at least double traditional residential housing.

"Whilst we have example after example of traditional sets of flats achieving gross yields typically in the high 7% to low 8% range (buy in prices around the low to mid $300,000s), there are still some rare opportunities out there," the valuation firm said. 

A recent sale of a two x two-bedroom duplex at 12 Macarthur Street, Koongal (pictured above) for $210,000, reflects a gross yield of 9.9%.

It is difficult to beat a near 10% return on a residential property in this region. This property then may benefit from the potential to increase the yield through a renovation and in turn increase the annual income able to be generated by the duplex.