What are Australia’s best regions for rental yield?

Mike Mortlock, the managing director of MCG Quantity Surveyors, has pointed out that “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”.

Campaspe Shire – a region that covers the area between Bendigo and Shepparton – is also an enticing prospect for investors. According to the data, rental yields for houses are up at 6.23 per cent and 11.28 per cent for units.

Turning attention to Queensland, and Outback – South and Bowen Basin are reporting rental yields for houses of 9.07 per cent and 8.88 per cent respectively. Both areas have recorded rental yields at over 9 per cent.

According to MCG Quantity Surveyors, these yields reflect tight rental markets, underpinned by strong activity in the mining and agriculture industries.

In comparison, suburbs closest to city CBDs are offering much lower rental yields. MCG Quantity Surveyors put forward Brisbane as an example, with rental yields for houses sitting at just 2.81 per cent within 10 kilometres of the CBD. This does improve slightly the further out from the city you get to 4.13 per cent for houses located between 20 kilometres and 30 kilometres of the CBD.

Perth is a similar story, with house yields just 3.38 per cent within 10 kilometres of the CBD. Between 20 kilometres and 30 kilometres of the CBD, this yield does lift to 4.70 per cent. When it comes to units, within 10 kilometres of the CBD, rental yields are 5.55 per cent, lifting up to 6.34 per cent between 20 kilometres and 30 kilometres.

While the comparison may make regional investments more appealing, MCG Quantity Surveyors did advise it as crucial that investors consider the risks associated with these regions – particularly when taking capital growth into account.

While yields are high, the firm noted that regional areas can be more volatile and, therefore, may not offer the same long-term capital growth potential as metropolitan options.

Mortlock stressed it as “important to balance the attraction of high yields with the potential for capital growth”.

He instructed: “Investors should carefully consider the overall risk profile and their long-term investment strategy.”

All in all, he stated the findings “underscore the importance of a diversified investment strategy that considers both regional and metropolitan markets”.