10 suburbs with strong capital growth and high rental yields

The findings, derived from Hotspotting’s The Pulse report, also recorded “above average metrics for yields and vacancy rates”, according to Washington Brown director Tyron Hyde.

“Of the top 50 locations in the current edition of the report, 48 have recorded growth in their median prices in the past 12 months – including 30 with capital growth above 10 per cent,” he said.

“The top 10 have all had price rises well above 20 per cent – in addition to providing superior rental yields.”

Over the last 12 months, the top property investment performers for annual capital growth are:

1. Hillman, WA – up 40 per cent to $530,000.
   
   
2. Moree, NSW – up 35 per cent to $330,000.
   
   
3. Armadale, WA – up 35 per cent to $460,000.
   
   
4. Orelia, WA – up 33 per cent to $500,000.
   
   
5. Withers, WA – up 30 per cent to $390,000.
   
   
6. Munno Para, SA – up 28 per cent to $495,000.
   
   
7. Greenfields, WA – up 28 per cent to $510,000.
   
   
8. Elizabeth East, SA – up 26 per cent to $478,000.
   
   
9. Balga, WA – up 26 per cent to $490,000.
   
   
10. Oakey, Qld – up 24 per cent to $368,000.

Weighing in on the 40 per cent capital growth recorded in the Perth suburb of Hillman, Hyde said that the surge was reflective of the “extraordinary price pressure” observed in the capital city over the past 12 months.

The director also highlighted the 35 per cent increase in values within the “little-known NSW regional town of Moree”, attributing this rise to the nearby construction of “Australia’s biggest national infrastructure project, the $35 billion Inland Rail Link”.

“The third scenario relates to Elizabeth East in the northern suburbs of Adelaide, a precinct heavily targeted by first home buyers and investors for its affordability, good amenities and proximity to major employment nodes,” added Hyde.

The Pulse report also looked at the top 10 locations for capital growth and yield combined, with five of these areas also featuring on the highest annual capital growth performer list, said Hotspotting director Terry Ryder.

“The first of these five suburbs is Armadale in Perth, which has benefitted from strong investor interest over the past few years,” he said.

“Before Perth’s boom convinced investors that any house in Perth was a good buy, few wanted to buy in downmarket Armadale. Now, it’s flavour of the year for those seeking a cheap house with high growth prospects.”

This Perth-based boom also led to a surge in Balga in the City of Stirling, which Hyde shared “delivered extraordinary results for anyone who bought there a year or more ago”.

“The median house price has increased 25 per cent and rents have risen 26 per cent over the past year. It doesn’t get much better than that for property investors,” the director said on Balga’s recent growth.

Hyde highlighted the northern Adelaide area of Munno Para as being “targeted by both home buyers and investors chasing affordable houses”. This attention over the last year resulted in a 28 per cent price increase, a median house rent increase of 18 per cent, and a vacancy rate of just 0.4 per cent.

The director identified nearby Elizabeth East as another location popular with “first home buyers and investors on a budget, as well as tenants” due to its affordability and infrastructure.

Speaking on the final suburb which showcased high capital growth and strong yields, Ryder stated that Withers in the Bunbury region of Western Australia has recorded “stellar capital and rental growth over the past year”.

In Withers, Ryder detailed that “rents have jumped 21 per cent in the last year and 30 per cent has been added to the median house price”.

“The median price remains below $400,000 and typical rental yields are still well above 7 per cent, so investors are likely to continue throwing money at this suburb,” he concluded.