Regional property markets are obtaining higher rental yields for investors compared to their city counterparts, according to new analysis.
According to data from MCG Quantity Surveyors, the further properties are from the centre of a major city, the higher the rental yield.
Headline insights:
- For properties zero to 10km from the city, Nollamara, in Perth, has the highest yield for houses at 5.29 per cent, while for units, Perth’s Glendalough has the highest yield of 7.73 per cent.
- For properties 10 to 20km from the city, Moulden, in Dariwn, has the highest yield for houses at 6.52 per cent, while Bakewell, also in Darwin, has the highest unit yield at 7.93 per cent.
- For properties 20 to 30km from the city, Brookdale, in Perth, has the highest yield for houses at 6.15 per cent, while Brisbane’s Park Ridge has the highest yield for units at 10.08 per cent.
Deeper insights:
MCG Quantity Surveyors Managing Director, Mike Mortlock, said regional areas offered better yields for investors.
He said regions such as West Pilbara, Campaspe, and Outback – South all had notable returns, which may catch the attention of property investors.
“Regional areas are exhibiting higher rental yields than metropolitan areas,” he said.
“For instance, West Pilbara in Western Australia has house yields of 9.85 per cent and unit yields of 13.12 per cent, driven by strong rental demand in the mining sector.”
Mr Mortlock said Victoria’s Campaspe region had house yields of 6.23 per cent and 11.28 per cent for units.
These yields are influenced by affordable property prices and consistent rental demand.
“Regions like Campaspe in Victoria are currently reflecting strong rental yields,” Mr Mortlock said.
In Queensland, the Outback – South and Bowen Basin – North areas have high house yields at 9.07 per cent and 8.88 per cent respectively, while unit yields sit at 9.63 per cent.
Mr Mortlock said the yields reflected a tight rental market supported by the mining and agriculture industries.
He said while yields were high, regional areas could be more susceptible to market fluctuations and may not offer the same long-term capital growth potential as metropolitan areas.
“It’s important to balance the attraction of high yields with the potential for capital growth,” Mr Mortlock said.
“Investors should carefully consider the overall risk profile and their long-term investment strategy.”
The comparative analysis also showed yields in metropolitan areas tend to increase with distance from the CBD.
Brisbane’s house yields increased from 2.81 per cent for homes zero to 10km from the city to 4.13 per cent for houses 20 to 30 per cent from the CBD.
Unit yields are the same, rising from 4.92 per cent to 5.55 per cent.
Perth exhibits a similar trend, with house yields rising from 3.38 per cent to 4.70 per cent and unit yields from 5.55 per cent to 6.34 per cent.
“Investors may find higher returns in suburbs further from the city centre,” Mr Mortlock said.
“However, regional areas are currently exhibiting higher yields, particularly in resource-rich regions.
“This underscores the importance of a diversified investment strategy that considers both regional and metropolitan markets.”
