Residential property investors seeking high rental yields should consider seeking out rural areas instead of capital cities, a leading property analyst says.
CoreLogic’s latest Top Rental Performers Report reveals the top performing suburbs over the 12 months to the end of July, based on gross rental yield of more than 5 per cent per annum, positive change in median rent and at least 20 property sales in the area.
CoreLogic research analyst Cameron Kusher says: “The cash rate is continuing to fall and investors may look to the housing market for yield instead.”
The number one suburb was Blackwater in north Queensland where the typical house has a rental yield of 11.7 per cent and a median value of $122,165 – a 19.5 per cent increase over 12 months.
The median rent has increased 16 per cent over 12 months and the rental vacancy is at 0.0 per cent.
This was followed by Broken Hill in far west New South Wales, which also has a rental yield of 11.7 per cent and a similar median value of $120,000. The annual change in median value dropped by 11.4 per cent.
The median rent increased by 4 per cent over 12 months and the rental vacancy is at 1.4 per cent.
Kusher says it will be a long time before suburbs in Sydney and Melbourne will have high rental yields, due to increasing value of property and the rising construction of apartment blocks.
Carlton was Melbourne’s only central suburb to appear on the list at 7.1 per cent, while there were none from Sydney or its surrounds.
Kusher says: “There is a huge supply of student accommodation in Carlton and this comes under the unit classification. The unit values are low but the rent is quite high.”
According to Kusher, the best areas for rent demonstrated solid rental yields, consistent rental growth and vacancy rates of less than 3 per cent.
Other top performers include Woree, a suburb of Cairns, QLD at 10.8 per cent rental yield; Manunda, another suburb in Cairns QLD, at 9.5 per cent; Katanning south-east of Perth, at 9.5 per cent; Cobar in central western NSW, at 8.8 per cent; Ararat in south-west Victoria, at 7.8 per cent; Wodonga on the Victorian and New South Wales border, at 6.5 per cent; and Queanbeyan near Canberra, which came in at 6.4 per cent.
Only one suburb from Western Australia and the Northern Territory made the list with both struggling through weak market conditions.
Darwin dwelling values are now 30.7 per cent below their May 2014 peak and Perth values are 20.6 per cent down from the June 2014 peak.
Queensland dominates the list with 42 suburbs, followed by 17 in New South Wales, 15 in South Australia and 15 in Victoria. There were eight suburbs in Tasmania and one in Australian Capital Territory.