Looking into an investment property? We’ve rounded up some of the top performing suburbs in each state.
Investors are slowly returning to the market after pulling in the reins in 2020. If you’re looking to invest in property this year, make sure you do your research.
While rental returns are one part of the income equation, there are a number of outgoings to factor into the financial aspect of your purchase. For instance, consider how location might affect your insurance premiums.
“Being in a high risk of fire or flood zone will have impact on your premium,” Carolyn Parrella, Head of Niche Distribution at Terri Scheer says as an example. “There are many factors which can influence the premium, including whether or not the property is vacant for long periods.”
To avoid leaving your rental income (and insurance premiums) vulnerable, consider suburbs that may show promising returns.
Here we line up some of the top performing suburbs across Australia in terms of rental yield, according to REA data.
Australian Capital Territory: Bruce, Phillip or Wright
Three suburbs share top spot in the ACT. However, rental yields are lower than other hotspots across the country.
Bruce, Phillip and Wright – the ACT suburbs with the highest rental yields – each have a rental yield averaging around 6.1%. However, this pales in comparison to other places around the country where, in some cases, yields are nearly twice as high.
“The reason why ACT has relatively low rental yields – although 6% is still a very high return for property in general – is that property prices are higher, incomes are higher and it’s generally a pleasant place to live, so demand is high,” REA economist Paul Ryan explains.
New South Wales: Broken Hill
When it comes to houses, Broken Hill currently offers the highest rental yield in Australia (11.7%).
While homes are incredibly cheap, costing on average $127,000, the average weekly rent is likely to be around $260.
“Broken Hill, like South Hedland and other areas on this list, has a lot of demand from mining [workers],” Ryan explains. “People want to live there for a short period of time, but don’t necessarily want to buy. There’s high rental demand without there being high purchase demand, driving yields up.”
Northern Territory: Zuccoli
Development in this fast-growing suburb cannot come quick enough as first home buyers look to enter the market for a bargain.
With Darwin’s property market receiving some long overdue love, areas like Zuccoli are expanding to meet demand.
With house average property prices sitting at $217,000 and a rental return of $575, investors are experiencing a return of around 8.2%.
“Zuccoli is an inexpensive area and rents are pretty high,” Ryan states. “Darwin, and the Northern Territory in general, has had quite a depressed housing market for several years. But over the past year or so, mining investment has returned and rental demand along with it, due to short term workers coming back to the NT.”
A house in Dysart will set you back around $140,000. Meanwhile, with weekly rents averaging $280, you’re looking to rake in around $14,560 a year – a yield of more than 10%.
Unsurprisingly, Dysart is a mining town, hence its exceptional rental market. However, buyers need to be aware that their mining town purchase could be short lived.
“The inevitable ‘boom-bust’ cycle of mining means that demand isn’t going to last forever,” Ryan adds. “However, with a 10% yield, you only need to be there for 10 years and the rent has paid for the property.”
Meanwhile, unit investors will see excellent returns around Cairns, such as Woree (10.3% return), Manunda (9.8%) and Bungalow (9.5%). However, house buyers are better off looking further inland in mining regions, like Dysart, Mount Morgan (10.1%) and the picturesque Charters Towers City (9.5%)
South Australia: Port Pirie West
This coastal hub north-west of Adelaide is proving it’s worth for those looking to invest in property.
Specifically, Port Pirie West is one of SA’s top investor suburbs, with an excellent 8.6% return on an average $110,000 property.
Port Pirie, a historic port town dating back to the 1800s, has its charms too. However, it is most likely attracting metal industry or mining workers to its ‘burbs.
Set amongst the wilderness of west Tasmania, the small, historic town of Zeehan is offering a decent return on inexpensive real estate.
With property prices at a median of $125,000 and rents averaging $220 per week, investors have the potential to see 9.5% returns.
Popularity in this region could potentially be due to mining and wind farm activities in the surrounds.
Following booms all around Tassie’s east, it appears interest in the island’s property market appears to know no bounds – and the west could be the final frontier.
Halfway between Melbourne and Adelaide in Victoria sits this simple little town of rather large rental returns of 8.3%.
In regional Nhill, the average property will set you back less than $200k ($170,000), with weekly rents clocking in at around $230.
As the halfway point between Adelaide and Melbourne (about eight hours from each), Nhill isn’t entirely untouched. It is also near the Luv-a-Duck farms and factories, providing plenty of jobs in agriculture and food production.
Western Australia: South Hedland
Last but not least is South Hedland: Australia’s #1 highest-yielding investor suburb.
Most wouldn’t think this town six hours south of Broome would pack such a punch in the market – but it does.
The average rental return on properties is 12.1%, with properties costing an average of $282,750. Units offer an even greater return of around 15.3%, with a median value of just under $170k.
“I would say the story here is similar to other mining towns: a strong influx of people who don’t want to buy,” Ryan says.
Remember, if you are investing in an area that attracts a lot of fly-in, fly-out workers or migrant workers who may have to leave on a moment’s notice, investing in landlord insurance can help protect your rental income. Terri Scheer – Australia’s leading landlord insurance specialist – provides specialist cover for your investment and rental income*.
*Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance. In arranging your insurance, Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 AFSL 218585 acts under authority given to it by Vero Insurance. Before buying this insurance, read the PDS and consider whether it is right for you. Go to terrischeer.com.au for a copy.
This article was originally published on
4 Apr 2023 at 9:07am
but has been regularly updated to keep the information current.