Are you looking for a way to boost your income? Investing in a suburb known for high rental yields could be the answer.
Rental yield is a way to figure out how much money you can make from renting out a property, compared with how much the property is worth. It helps you determine whether the money you would get from renting would be good value for the property you own.
You calculate gross rental yield by dividing total rent for a year by the value of a property and multiplying by 100 so that you get a percentage:
Weekly Rent x 52/Property Value x 100 = Gross Rental Yield
A rental yield of 7-10% is commonly considered high. You should keep in mind, though, that high yields are relative. What is a high rental yield for a property differs based on factors such as its location, type and additional considerations; for example, a yield of 5% may be relatively good value if the property is in a suburb where the average rental yield is 3.5%
Let’s look at Australia’s top 10 suburbs for rental yield in each state and some factors that contribute to the high yields. We’ll also discuss some things to consider when investing in a suburb with high rental yields.
Top 10 High-Rental-Yield Suburbs In Sydney
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Lakemba | Inner South West | Units | $425,677 | 5.97% | $480 |
| 2 | Warwick Farm | South West | Units | $383,047 | 5.96% | $424 |
| 3 | Wiley Park | Inner South West | Units | $439,638 | 5.70% | $466 |
| 4 | Liverpool | South West | Units | $408,981 | 5.62% | $438 |
| 5 | Punchbowl | Inner South West | Units | $478,223 | 5.50% | $480 |
| 6 | Fairfield | South West | Units | $397,351 | 5.33% | $409 |
| 7 | Mount Druitt | Blacktown | Units | $416,156 | 5.21% | $436 |
| 7 | Leumeah | Outer South West | Units | $442,420 | 5.11% | $424 |
| 9 | Wyong | Central Coast | Units | $472,935 | 5.01% | $439 |
| 10 | Carramar | Parramatta | Units | $400,176 | 4.77% | $357 |
Top 10 High-Rental-Yield Suburbs In Melbourne
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Dandenong | South East | Units | $399,268 | 5.28% | $411 |
| 2 | Albion | West | Units | $359,076 | 5.14% | $356 |
| 3 | Craigieburn | North West | Units | $437,941 | 5.09% | $414 |
| 4 | Broadmeadows | North West | Units | $430,548 | 5.03% | $408 |
| 5 | Bacchus Marsh | West | Units | $379,138 | 5.01% | $366 |
| 6 | Meadow Heights | North West | Units | $433,522 | 5.00% | $410 |
| 7 | Melton | West | Units | $374,242 | 4.89% | $351 |
| 8 | Truganina | West | Units | $459,937 | 4.82% | $412 |
| 9 | Melton South | West | Units | $373,495 | 4.81% | $342 |
| 10 | Sydenham | West | Units | $469,927 | 4.73% | $415 |
Top 10 High-Rental-Yield Suburbs In Brisbane
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Woodridge | Logan – Beaudesert | Units | $251,564 | 7.62% | $357 |
| 2 | Caboolture | Moreton Bay – North | Units | $301,872 | 7.13% | $369 |
| 3 | Waterford West | Logan – Beaudesert | Units | $282,200 | 7.13% | $396 |
| 4 | Beenleigh | Logan – Beaudesert | Units | $287,460 | 6.91% | $386 |
| 5 | Hillcrest | Logan – Beaudesert | Units | $336,467 | 6.85% | $424 |
| 6 | Goodna | Ipswich | Units | $297,615 | 6.77% | $376 |
| 7 | Bundamba | Ipswich | Units | $346,496 | 6.64% | $385 |
| 8 | Loganlea | Logan – Beaudesert | Units | $375,406 | 6.36% | $447 |
| 9 | Mount Warren Park | Logan – Beaudesert | Units | $325,032 | 6.31% | $379 |
| 10 | Strathpine | Moreton Bay – South | Units | $386,844 | 6.28% | $453 |
Top 10 High-Rental-Yield Suburbs In Adelaide
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Elizabeth North | North | Houses | $319,762 | 6.52% | $401 |
| 2 | Salisbury | North | Units | $286,613 | 6.45% | $366 |
| 3 | Elizabeth Downs | North | Houses | $334,786 | 6.43% | $415 |
| 4 | Smithfield | North | Houses | $362,757 | 6.15% | $423 |
| 5 | New Port | West | Units | $344,912 | 5.94% | $429 |
| 6 | Elizabeth Park | North | Houses | $391,067 | 5.84% | $432 |
| 7 | Kurralta Park | West | Unit | $385,124 | 5.82% | $401 |
| 8 | Davoren Park | North | Houses | $367,804 | 5.82% | $409 |
| 9 | Andrews Farm | North | Unit | $374,679 | 5.80% | $401 |
| 10 | Plympton | West | Unit | $388,614 | 5.78% | $402 |
Top 10 High-Rental-Yield Suburbs In Perth
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Orelia | South West | Units | $195,985 | 10.58% | $370 |
| 2 | Armadale | South East | Units | $267,473 | 9.05% | $431 |
| 3 | Kelmscott | South East | Units | $268,954 | 8.31% | $414 |
| 4 | Glendalough | Inner | Units | $287,351 | 8.25% | $470 |
| 5 | Gosnells | South East | Units | $290,895 | 8.01% | $433 |
| 6 | Maddington | South East | Units | $316,117 | 7.91% | $461 |
| 7 | Cockburn Central | South West | Units | $323,878 | 7.66% | $470 |
| 8 | Waikiki | South West | Units | $298,638 | 7.63% | $414 |
| 9 | Bayswater | North East | Units | $337,283 | 7.59% | $464 |
| 10 | Midland | North East | Units | $309,696 | 7.47% | $428 |
Top 10 High-Rental-Yield Suburbs In Hobart
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Risdon Vale | Hobart | Houses | $441,446 | 5.84% | $489 |
| 2 | Chigwell | Hobart | Houses | $488,859 | 5.59% | $521 |
| 3 | Glenorchy | Hobart | Units | $441,448 | 5.55% | $447 |
| 4 | New Norfolk | Hobart | Houses | $443,940 | 5.40% | $475 |
| 5 | Warrane | Hobart | Houses | $528,486 | 5.36% | $544 |
| 6 | Berriedale | Hobart | Houses | $504,853 | 5.31% | $529 |
| 7 | Claremont | Hobart | Units | $433,988 | 5.27% | $420 |
| 8 | West Moonah | Hobart | Units | $461,890 | 5.27% | $438 |
| 9 | Rokeby* | Hobart | Houses | $510,732 | 5.26% | $542 |
| 10 | Lutana | Hobart | Houses | $543,881 | 5.23% | $550 |
Top 10 High-Rental-Yield Suburbs In Darwin
| Rank | Suburb | Region | Property Type | Median Value | Rental Yield | Median Rent |
|---|---|---|---|---|---|---|
| 1 | Millner | Darwin | Units | $309,398 | 8.37% | $470 |
| 2 | Bakewell | Darwin | Units | $281,187 | 8.18% | $444 |
| 3 | Driver | Darwin | Units | $286,939 | 8.16% | $447 |
| 4 | Rosebery | Darwin | Units | $328,729 | 8.02% | $496 |
| 5 | Parap | Darwin | Units | $350,358 | 7.95% | $525 |
| 6 | Darwin City | Darwin | Units | $416,232 | 7.90% | $609 |
| 7 | Coconut Grove | Darwin | Units | $332,712 | 7.64% | $462 |
| 8 | Nightcliff | Darwin | Units | $367,488 | 7.39% | $487 |
| 9 | Stuart Park | Darwin | Units | $423,698 | 7.31% | $589 |
| 10 | Leanyer | Darwin | Units | $345,026 | 7.27% | $459 |
SOURCE: CoreLogic Quarterly Rental Review, July 2023
Understanding Rental Yield
Rental yield measures the return on investment for a rental property. A reminder, it is calculated by dividing the annual rental income the property generates by the property’s value, expressed as a percentage. For example, if a property generates $20,000 in annual rental income and is valued at $400,000, the gross rental yield would be 5%.
There are two main types of rental yield: gross rental yield and net rental yield.
- Gross rental yield: This is calculated by dividing the annual income generated from rent by the property’s value and multiplying by 100, to express the answer as a percentage.
- Net rental yield: This factors in the expenses associated with property ownership and maintenance. It is calculated by subtracting the total cost of owning and maintaining a property from the annual rental income, dividing what’s left by the property’s value, and multiplying by 100, so the answer is expressed as a percentage.
Rental yield is important, but you should keep in mind that it is not the only thing to consider. You should also look at factors such as capital growth and risk to determine the true return on investment. Check out our page, Rental Yield Vs Capital Growth – Which Is Better?, for an in-depth comparison of these factors.
How To Look For Properties That Can Get You A Higher Rental Yield
If you are considering investing in a suburb with high yields, there are a few things you should keep in mind:
- Research high-demand areas: Look for suburbs with strong rental demand, such as locations near universities, business districts or popular amenities. These areas tend to attract tenants and can result in higher rental yields.
- Analyse rental market trends: Stay updated on trends, cycles and forecasts. Look for areas where rental prices are on the rise or expected to increase in the future. This can indicate the potential for higher yields.
- Consider property type: Different property types can yield different rental returns. For example, apartments or units in high-demand areas may have higher yields than houses. Consider the preferences of the target market and choose a property type accordingly.
- Compare gross rental yields: Calculating the gross rental yield of potential properties will give you an estimate of the potential rental return. Compare the yields of different properties to identify those with higher potential returns.
- Assess property condition and features: Properties in good condition and desirable features can command higher rents. Look for well-maintained properties with modern amenities and offer attractive features to tenants.
- Consider long-term growth potential: Look for areas with potential for long-term growth, such as upcoming infrastructure projects, new developments, or improving amenities. These factors can contribute to increased demand and higher yields over time.
- Consult with professionals: Seek advice from real-estate agents, property managers, or investment advisers with expertise in the local rental market. They can provide valuable insights and help you identify properties with higher yield potential. They can also help you find the right property and negotiate the best price.
- Understand the risks: There are always risks involved in investing, so it is essential to understand them before committing to anything. These risks can include vacancy, damage and capital losses.
We’ve gathered valuable tips for buying an investment property. Visit the page for more in-depth guidance.
We Can Help You Get A Home Loan!
Ready to tap into the potential of high-rental-yield suburbs? We share your passion for making smart investments and are here to make it happen for you. Let us assist you in securing the perfect home loan for your investment journey. Start now! Call us today at 1300 889 743 or complete our free online assessment form.
