Are you thinking of investing in a property this year? If so, then you should know that rental yield is a very important factor in getting a good return on investment.

A rental yield is essentially the annual amount of rental income as a percentage against the value of that property. So to put it in simple terms, the higher your rental yield is, the better your cash flow will be.

Some of the deciding factors of rental yield are the location of the property, the type of your property, the supply and the demand in the respective real estate market, and the overall condition of the property. 

Because rental yield is such an important factor that will help you make a prudent decision on your real estate investment, we’ve compiled a list of the suburbs with the highest rental yield in Australia for you. 

Before we get into the suburbs with the highest rental yield, let’s look at what constitutes a good rental yield. In Australia, a good rental yield for a capital city suburb will usually fall anywhere between 7% and 8%. When looking at regional areas, the rental yield for houses falls somewhere between 12% and 13%.

Now let’s delve into the suburbs that can bring you a high rental yield.

The rental market in Adelaide has seen many ebbs and flows during the pandemic peaks, but has managed to remain relatively stable as compared to other states in the country. It is also studied that the rental yields in the area are now increasing again and are projected to continue to increase.

According to research done by SQM, the gross rental yield in Adelaide is at 3.9% for houses and about 5.5% for units. The average mean sale price stands at about $607,817 for houses.

For units, this price is $322,669. In both cases, experts say that this marks an increase in line with real estate trends in the country. 

During 2020, the rental market in Perth saw a sharp increase in prices of 8.2%; Perth was experiencing a downward trend shortly before the pandemic started. However, this ended and the prices have been increasing steadily ever since and are anticipated to continue, making this great news for real estate investors. 

It is predicted that a cyclical rebound in rent prices will attract more and more investors to the suburbs in Perth. According to research conducted by SQM, the gross rental yield in Perth is 3.9% for houses and about 5.4% for units. The average median sale price in Perth is looking good right now at an estimated $700,900 for homes.

In the case of units, the average median sale price is standing at $399,269 and is almost identical to what it was during the early stages of the pandemic.

Brisbane’s real estate market was also somewhat impacted by the pandemic, although it can be argued that it was not as impacted as Sydney or Melbourne. The rental prices in the region remained somewhat stable, even though the influx of immigrants saw a steady decline due to borders being closed down. 

According to real estate experts, Brisbane sees a steady stream of people who are moving in from interstate which makes the area a good real estate investment. Gold Coast and Sunshine Coast have emerged as the top two suburbs that have seen the most people move in to. 

Sunshine Coast has also experienced the highest annual capital growth in houses in all of Australia. As per data gathered by SQM, the gross rental yield in Brisbane’s suburbs stands at around 5.2% for homes and an estimated 3.7% for units. The average median sale price in Brisbane, at present, is estimated around $743,428 for homes. This price is almost a staggering $100,000 more than the price that was in the market at the beginning of the pandemic. The average median sale price for units in the area has remained somewhat stable and is at $397, 859.

The biggest question right now is whether or not this is a prudent time to invest in real estate in Australia. Even though the prices are definitely soaring, experts seem to think that this is a favourable time for buyers. 

This is perhaps because of the fact that interest rates are at an all-time low and are also anticipated to stay low for at least the next few years.

In addition to this, real estate prices are expected to continue on the current upward trend now that international borders have opened up and normalcy has been restored.

The current rental property scarcity in Australia also means that houses, units and apartments are filling up really fast while the demand is definitely on the rise. 

Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.