Almost half the nation’s suburbs with 10 per cent-plus rental yields hail from just one state.
The highest-yielding investment locations have been revealed by new data from CoreLogic RP Data, with the central and south coast regions of New South Wales dominating the list.
Malua Bay on the NSW south coast was the highest-yielding suburb in Australia, with a yield of 15.32 per cent based on a weekly median advertised rent of $1,300 for houses.
Tasmania’s Zeehan was the second-highest yielding suburb in the country, with a yield of 14.65 per cent.
Killcare, on the NSW central coast, was the third-highest yielding rental market, with a rate of 14.29 per cent for houses. The weekly median advertised rental in Killcare was recorded at $3,850.
Zuccoli, in the Northern Territory, was the fourth-highest yielding suburb in Australia. Vacant residential blocks are still being released in the newly established suburb, which boasts a 13.99 per cent yield based on a weekly median advertised rent of $740 a week for houses.
New South Wales was the only state where all suburbs in the top 10 recorded yields in excess of 10 per cent. Manyana – the 10th-highest yielding suburb in the state – recorded a yield of 11.12 per cent for houses.
Matt Knight is the director of south coast-based buyer’s agency Precium and regularly assists investors wishing to buy in the region.
Mr Knight said a large proportion of the south coast was feeling the effects of buyers moving away from the Sydney market.
“The south coast is seeing renewed interest from retiring baby boomers and younger families making a lifestyle decision to head out of Sydney,” he explained. “Population and property values from Wollongong to Kiama have been rising for some time, uplift is in various stages in various parts of the Shoalhaven such as Nowra, Bay and Basin and the beach hamlets.”
Mr Knight said investors have also been attracted to the region, but cautioned any potential buyers to thoroughly research each local market.
“Investors are also seeking the relative affordability, compared to Sydney, of quality property close to the water. The ripple effect is moving out from Sydney, with yields sometimes stronger than many Sydney suburbs but it pays to do your research.
“Regarding rents, there are a wide range of price points and rental returns along the coast as every micro market has its own specific drivers.”
High yields in some coastal markets may not be indicative of the full story, with Mr Knight acknowledging that furnished residences and holiday lets have a strong influence on recorded yields.
“Along with the physical factors it is essential to understand the numbers, yields are part of the picture but so are vacancy rates, combining the two helps get a better picture of the return an investment can generate and how quickly it would be to relet a property if your tenant leaves,” he added.
Away from markets influenced by holiday rentals and new housing stock, mining towns continue to represent strong yielding markets in states such as Western Australia.
Of WA’s top 10 highest-yielding suburbs, most feature economies at least partially reliant on the resources economy.
This includes Kambalda West, the state’s top performer with a gross rental yield of 10.2 per cent, calculated on a median weekly advertised rental of $260.
Based on the figures for the top 10 suburbs of each state and territory, the Australian Capital Territory had the lowest rental yields. Scullin was its number one suburb with a gross rental yield of 8.05 per cent for units, with Theodore in 10th position with a yield of 5.5 per cent on units.