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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of February 20, 2024. View disclaimer.

So far, 2023 has been a tough time to be a renter in Australia. Rental rates have risen more than 10% in the past year, and with vacancy rates still low and record migration levels expected in the next financial year, most analysts see little chance of respite.

The other side of the coin is rental income is increasing for investment property owners. While some landlords face restrictions that limit their earning potential, rental yield, the percentage of a property’s value it can earn in rent each year, has increased. According to Your Investment Property Magazine data, two Australian suburbs have even cracked 15% in annual rental yield.

The number one suburb for gross rental yield for houses as of April 2023 was Lightning Ridge in New South Wales. Lightning Ridge is in rural New South Wales, near the Queensland border, and the average rental yield was 15.29%. As you might expect, property in Lightning Ridge is among the cheapest in Australia, with a median price of just $85,000 and $250 median rent.

For units, it was Newman in Western Australia that took the crown, with a median price of $250,000 and median rent of $440, meaning the annual rental yield is 15.25%.

See the full list here

How important are rental yields to property investors?

For investors, rental yield is a useful way to assess annual income, but there are plenty of other things to take into account as well, like vacancy rates, planned investment and other factors that could suggest strong capital gains.

Simon Pressley of Propertyology says basing property investments primarily on rental yields is a “flawed strategy”.

“At the end of the day, a few thousand dollars of income per year is nowhere near enough to retire on,” Mr Pressley told Savings.com.au.

“But a property that produces strong capital growth means hundreds of thousands of dollars' equity, enabling the investor to repeat the process, plus the option of converting equity into cash during the retirement years.”

He said the most important consideration should be selecting an area with good economic fundamentals as this is what drives capital growth.

“The next most important priority is buying a conventional asset - a standard house - in a central part of town. When it comes to sell, the conventional nature will attract a larger resale audience than other assets,” Mr Pressley said.

“Apartments produce higher rental yields than a conventional house in the same location, but Propertyology’s studies confirm that investing in asset types other than detached houses is surrendering half, or more, of your capital growth potential.”

What gives a suburb a strong rental yield?

Rental yield is how much income a property generates relative to its value. It’s calculated by dividing the annual rental income a property generates by its market value.

When the value of a property increases dramatically, the rental yield can decrease, because the rental income is smaller relative to the property value, but that doesn’t mean the property is earning any less.

Therefore, rental yields tend to be higher in areas where the demand for rent is higher than the demand for owner occupied property. Take Lightning Ridge, where the average rental yield for houses was 15.29% in April 2023. Lightning Ridge is famous for opal mining, and therefore has a more transient population, as miners come and go. Likewise, Newman, Tom Price, South Headland and Port Headland - all in the Pilbara region of Western Australia known for huge petroleum, natural gas and iron ore deposits - made the top ten suburbs for houses, Newman also leading the way for units.

The majority of the suburbs in the top 100 lists lie outside of the capital cities of the respective states. For houses, just Point Lookout (Brisbane, placed 10th) and Kwinana Town Centre (Perth, placed 98th) made the cut. Units had slightly stronger representation from Australia’s big cities, with 15 suburbs from Greater Perth, 10 from Darwin, and one each from Brisbane and Adelaide

What will happen to rental yields in 2023?

Rental rates are high at the time of writing (July 2023), and all indicators suggest it’s unlikely there will be respite for beleaguered tenants anytime soon.

In June 2023, Australia’s four largest cities recorded double digit annual rent growth, according to CoreLogic.

Median rent (June '23)

Quarterly growth

Annual growth

Sydney

$733

3.2%

12.9%

Melbourne

$551

3.9%

12.6%

Brisbane

$614

2.1%

10.3%

Perth

$599

3.4%

13.4%

Adelaide

$549

2.5%

9.6%

Hobart

$552

-1.0%

1.3%

Darwin

$600

0.7%

3.5%

Canberra

$669

-1.0%

-1.0%

The overall growth rate for June was 2.5%, down from 2.8% in May, but experts including Dr Nicola Powell, Domain's Chief of Research and Economics, don’t expect rental pressures to ease anytime soon.

“Our research shows that more than double the rental listings are needed today to create a balanced rental market," Ms Powell said.

Record migration and undersupply is expected to keep rental rates high, while there is more uncertainty about how property values will change in the coming months.

Recent CoreLogic data found Australian property has appreciated over the past three months, defying popular sentiment that 2023 would see prices continue to drop dramatically as high rates curbed borrowing power.

However, economists maintain the downside risks to property prices from high rates and a slowing economy remain high. Property prices dropping while rental rates increase means rental yield goes up, but this isn’t necessarily good news for investors who are chasing strong capital gains.

Top 100 rental yield suburbs in Australia for houses

Suburb

Postcode

State

Median property Price

Median weekly rent

Annual rental yield

1

Lightning Ridge

2834

NSW

 $        85,000.00

 $         250.00

15.29%

2

Tom Price

6751

WA

 $      652,500.00

 $     1,775.00

14.15%

3

South Boulder

6432

WA

 $      220,000.00

 $         480.00

11.35%

4

Coolgardie

6429

WA

 $      166,000.00

 $         350.00

10.96%

5

Newman

6753

WA

 $      330,000.00

 $         675.00

10.64%

6

South Hedland

6722

WA

 $      398,000.00

 $         800.00

10.45%

7

Pioneer

4825

QLD

 $      215,000.00

 $         420.00

10.16%

8

Blackwater

4717

QLD

 $      180,000.00

 $         340.00

9.82%

9

Port Hedland

6721

WA

 $      700,000.00

 $     1,300.00

9.66%

10

Point Lookout

4183

QLD

 $  1,350,000.00

 $     2,500.00

9.63%

11

Broken Hill

2880

NSW

 $      175,000.00

 $         320.00

9.51%

12

Port Pirie West

5540

SA

 $      164,500.00

 $         300.00

9.48%

13

Solomontown

5540

SA

 $      165,000.00

 $         300.00

9.45%

14

Exmouth

6707

WA

 $      660,000.00

 $     1,200.00

9.45%

15

Merredin

6415

WA

 $      190,000.00

 $         345.00

9.44%

16

Millars Well

6714

WA

 $      470,000.00

 $         850.00

9.40%

17

Ravensthorpe

6346

WA

 $      177,500.00

 $         320.00

9.37%

18

Mount Morgan

4714

QLD

 $      170,000.00

 $         300.00

9.18%

19

Zeehan

7469

TAS

 $      198,500.00

 $         350.00

9.17%

20

West Lamington

6430

WA

 $      380,000.00

 $         670.00

9.17%

21

Depot Hill

4700

QLD

 $      198,750.00

 $         350.00

9.16%

22

Dysart

4745

QLD

 $      200,000.00

 $         350.00

9.10%

23

Quorn

5433

SA

 $      180,000.00

 $         315.00

9.10%

24

Rangeway

6530

WA

 $      177,750.00

 $         310.00

9.07%

25

Moura

4718

QLD

 $      190,000.00

 $         330.00

9.03%

26

Ouyen

3490

VIC

 $      180,500.00

 $         310.00

8.93%

27

Hannans

6430

WA

 $      382,500.00

 $         650.00

8.84%

28

Tennant Creek

860

NT

 $      265,000.00

 $         450.00

8.83%

29

Boulder

6432

WA

 $      287,000.00

 $         480.00

8.70%

30

Sunset

4825

QLD

 $      279,000.00

 $         465.00

8.67%

31

Pegs Creek

6714

WA

 $      480,000.00

 $         800.00

8.67%

32

Mornington

4825

QLD

 $      284,500.00

 $         470.00

8.59%

33

Warren

2824

NSW

 $      200,000.00

 $         330.00

8.58%

34

Baynton

6714

WA

 $      667,500.00

 $     1,100.00

8.57%

35

Lamington

6430

WA

 $      380,000.00

 $         625.00

8.55%

36

Rockhampton City

4700

QLD

 $      225,000.00

 $         370.00

8.55%

37

Soldiers Hill

4825

QLD

 $      304,275.00

 $         500.00

8.54%

38

Peterborough

5422

SA

 $      140,000.00

 $         230.00

8.54%

39

Parkside

4825

QLD

 $      270,000.00

 $         440.00

8.47%

40

Stapylton

4207

QLD

 $      252,500.00

 $         410.00

8.44%

41

South Kalgoorlie

6430

WA

 $      300,000.00

 $         480.00

8.32%

42

Berrigan

2712

NSW

 $      220,000.00

 $         350.00

8.27%

43

Bulgarra

6714

WA

 $      490,000.00

 $         777.50

8.25%

44

North Lismore

2480

NSW

 $      290,000.00

 $         460.00

8.25%

45

Piccadilly

6430

WA

 $      347,000.00

 $         550.00

8.24%

46

Winston

4825

QLD

 $      286,000.00

 $         450.00

8.18%

47

Charleville

4470

QLD

 $      156,500.00

 $         245.00

8.14%

48

Blackall

4472

QLD

 $      160,000.00

 $         250.00

8.13%

49

Kalgoorlie

6430

WA

 $      307,500.00

 $         480.00

8.12%

50

Barcaldine

4725

QLD

 $      215,000.00

 $         335.00

8.10%

51

Nickol

6714

WA

 $      570,000.00

 $         887.50

8.10%

52

Port Augusta

5700

SA

 $      200,000.00

 $         310.00

8.06%

53

Broome

6725

WA

 $      522,500.00

 $         800.00

7.96%

54

Tralee

2620

NSW

 $      457,500.00

 $         700.00

7.96%

55

Ingham

4850

QLD

 $      212,500.00

 $         325.00

7.95%

56

Woodburn

2472

NSW

 $      360,000.00

 $         550.00

7.94%

57

Hillston

2675

NSW

 $      230,000.00

 $         350.00

7.91%

58

Moranbah

4744

QLD

 $      330,000.00

 $         500.00

7.88%

59

Port Augusta West

5700

SA

 $      225,000.00

 $         340.00

7.86%

60

Katherine South

850

NT

 $      300,000.00

 $         450.00

7.80%

61

East Innisfail

4860

QLD

 $      250,000.00

 $         375.00

7.80%

62

Capella

4723

QLD

 $      225,000.00

 $         335.00

7.74%

63

Katanning

6317

WA

 $      208,500.00

 $         310.00

7.73%

64

Berserker

4701

QLD

 $      270,000.00

 $         400.00

7.70%

65

Whyalla Norrie

5608

SA

 $      182,500.00

 $         270.00

7.69%

66

Narrogin

6312

WA

 $      230,000.00

 $         340.00

7.69%

67

Charters Towers City

4820

QLD

 $      225,000.00

 $         330.00

7.63%

68

Healy

4825

QLD

 $      410,000.00

 $         600.00

7.61%

69

Clermont

4721

QLD

 $      260,000.00

 $         380.00

7.60%

70

Djugun

6725

WA

 $      650,000.00

 $         950.00

7.60%

71

Spalding

6530

WA

 $      219,000.00

 $         320.00

7.60%

72

Whyalla Stuart

5608

SA

 $      180,000.00

 $         260.00

7.51%

73

West Rockhampton

4700

QLD

 $      319,000.00

 $         460.00

7.50%

74

Nulsen

6450

WA

 $      215,000.00

 $         310.00

7.50%

75

Withers

6230

WA

 $      285,000.00

 $         410.00

7.48%

76

Home Hill

4806

QLD

 $      195,000.00

 $         280.00

7.47%

77

Cable Beach

6726

WA

 $      595,000.00

 $         850.00

7.43%

78

Somerville

6430

WA

 $      525,000.00

 $         750.00

7.43%

79

Dunbogan

2443

NSW

 $      662,500.00

 $         945.00

7.42%

80

Tully

4854

QLD

 $      242,500.00

 $         345.00

7.40%

81

Longreach

4730

QLD

 $      225,000.00

 $         320.00

7.40%

82

Boddington

6390

WA

 $      310,000.00

 $         440.00

7.38%

83

Port Pirie South

5540

SA

 $      248,500.00

 $         350.00

7.32%

84

Allenstown

4700

QLD

 $      285,000.00

 $         400.00

7.30%

85

Cobar

2835

NSW

 $      200,000.00

 $         280.00

7.28%

86

Lochinvar

2321

NSW

 $      449,000.00

 $         625.00

7.24%

87

Warracknabeal

3393

VIC

 $      212,000.00

 $         295.00

7.24%

88

Townview

4825

QLD

 $      325,000.00

 $         450.00

7.20%

89

Cloncurry

4824

QLD

 $      255,000.00

 $         350.00

7.14%

90

Ayr

4807

QLD

 $      235,000.00

 $         320.00

7.08%

91

Park Avenue

4701

QLD

 $      305,500.00

 $         415.00

7.06%

92

Roxby Downs

5725

SA

 $      280,000.00

 $         380.00

7.06%

93

Collie

6225

WA

 $      280,000.00

 $         380.00

7.06%

94

Katherine

850

NT

 $      407,500.00

 $         550.00

7.02%

95

Happy Valley

4825

QLD

 $      356,000.00

 $         480.00

7.01%

96

Katherine East

850

NT

 $      410,000.00

 $         550.00

6.98%

97

Kwinana Town Centre

6167

WA

 $      340,000.00

 $         455.00

6.96%

98

Chinchilla

4413

QLD

 $      300,000.00

 $         400.00

6.93%

99

Coraki

2471

NSW

 $      340,000.00

 $         450.00

6.88%

100

Moree

2400

NSW

 $      265,500.00

 $         350.00

6.85%

Top 100 rental yield suburbs in Australia for units

Suburb

Postcode

State

Median property price

Median weekly rent

Annual rental yield

1

Newman

6753

WA

 $      150,000.00

 $     440.00

15.25%

2

Rangeway

6530

WA

 $      102,900.00

 $     250.00

12.63%

3

Bulgarra

6714

WA

 $      207,500.00

 $     500.00

12.53%

4

South Hedland

6722

WA

 $      270,375.00

 $     650.00

12.50%

5

Piccadilly

6430

WA

 $      214,750.00

 $     470.00

11.38%

6

Kalgoorlie

6430

WA

 $      215,000.00

 $     450.00

10.88%

7

Baynton

6714

WA

 $      395,000.00

 $     780.00

10.27%

8

Pegs Creek

6714

WA

 $      365,000.00

 $     700.00

9.97%

9

Beresford

6530

WA

 $      150,000.00

 $     285.00

9.88%

10

Parmelia

6167

WA

 $      177,000.00

 $     330.00

9.69%

11

Broome

6725

WA

 $      287,500.00

 $     525.00

9.50%

12

Currajong

4812

QLD

 $      162,000.00

 $     295.00

9.47%

13

Somerville

6430

WA

 $      275,000.00

 $     490.00

9.27%

14

Orelia

6167

WA

 $      186,000.00

 $     330.00

9.23%

15

Heatley

4814

QLD

 $      158,500.00

 $     280.00

9.19%

16

Bayswater

6053

WA

 $      255,000.00

 $     449.50

9.17%

17

Manunda

4870

QLD

 $      183,500.00

 $     320.00

9.07%

18

Park Holme

5043

SA

 $      270,000.00

 $     470.00

9.05%

19

Whyalla Playford

5600

SA

 $      138,000.00

 $     240.00

9.04%

20

New Auckland

4680

QLD

 $      175,000.00

 $     302.50

8.99%

21

Cranbrook

4814

QLD

 $      180,000.00

 $     310.00

8.96%

22

Woree

4868

QLD

 $      187,000.00

 $     320.00

8.90%

23

Bungalow

4870

QLD

 $      205,000.00

 $     350.00

8.88%

24

Hyde Park

4812

QLD

 $      176,500.00

 $     300.00

8.84%

25

Moree

2400

NSW

 $      150,000.00

 $     250.00

8.67%

26

Bakewell

832

NT

 $      270,000.00

 $     450.00

8.67%

27

Hermit Park

4812

QLD

 $      192,000.00

 $     320.00

8.67%

28

Port Hedland

6721

WA

 $      421,000.00

 $     700.00

8.65%

29

Gray

830

NT

 $      247,000.00

 $     410.00

8.63%

30

Idalia

4811

QLD

 $      238,000.00

 $     390.00

8.52%

31

Thuringowa Central

4817

QLD

 $      313,000.00

 $     510.00

8.47%

32

Edmonton

4869

QLD

 $      196,000.00

 $     315.00

8.36%

33

Sorrento

6020

WA

 $      265,000.00

 $     425.00

8.34%

34

Railway Estate

4810

QLD

 $      206,000.00

 $     330.00

8.33%

35

Kingaroy

4610

QLD

 $      197,000.00

 $     315.00

8.31%

36

South Gladstone

4680

QLD

 $      169,000.00

 $     270.00

8.31%

37

Karama

812

NT

 $      270,000.00

 $     427.50

8.23%

38

Rosslea

4812

QLD

 $      209,000.00

 $     330.00

8.21%

39

Emerald

4720

QLD

 $      207,500.00

 $     325.00

8.14%

40

Gladstone Central

4680

QLD

 $      225,000.00

 $     350.00

8.09%

41

Southside

4570

QLD

 $      180,000.00

 $     280.00

8.09%

42

Condon

4815

QLD

 $      245,000.00

 $     380.00

8.07%

43

Douglas

4814

QLD

 $      260,000.00

 $     400.00

8.00%

44

Garbutt

4814

QLD

 $      215,500.00

 $     330.00

7.96%

45

Kununurra

6743

WA

 $      295,000.00

 $     450.00

7.93%

46

Narrabri

2390

NSW

 $      184,000.00

 $     280.00

7.91%

47

Glendalough

6016

WA

 $      278,000.00

 $     420.00

7.86%

48

the Gap

870

NT

 $      280,000.00

 $     422.50

7.85%

49

Manoora

4870

QLD

 $      236,500.00

 $     350.00

7.70%

50

West End

4810

QLD

 $      216,500.00

 $     320.00

7.69%

51

Millner

810

NT

 $      305,000.00

 $     450.00

7.67%

52

East Side

870

NT

 $      301,000.00

 $     440.00

7.60%

53

Darwin

800

NT

 $      445,000.00

 $     650.00

7.60%

54

Cannonvale

4802

QLD

 $      310,000.00

 $     450.00

7.55%

55

Blacks Beach

4740

QLD

 $      310,000.00

 $     450.00

7.55%

56

Chinchilla

4413

QLD

 $      221,250.00

 $     320.00

7.52%

57

Parap

820

NT

 $      371,000.00

 $     535.00

7.50%

58

Mooroobool

4870

QLD

 $      265,000.00

 $     380.00

7.46%

59

Mackay

4740

QLD

 $      265,000.00

 $     380.00

7.46%

60

Collingwood Park

4301

QLD

 $      279,500.00

 $     400.00

7.44%

61

Driver

830

NT

 $      301,000.00

 $     430.00

7.43%

62

Pimlico

4812

QLD

 $      210,000.00

 $     300.00

7.43%

63

South Yunderup

6208

WA

 $      252,500.00

 $     360.00

7.41%

64

Earlville

4870

QLD

 $      268,000.00

 $     380.00

7.37%

65

Leanyer

812

NT

 $      340,000.00

 $     480.00

7.34%

66

Shoalwater

6169

WA

 $      235,000.00

 $     330.00

7.30%

67

Thornlie

6108

WA

 $      285,000.00

 $     400.00

7.30%

68

Edge Hill

4870

QLD

 $      271,000.00

 $     380.00

7.29%

69

North Mackay

4740

QLD

 $      250,000.00

 $     350.00

7.28%

70

West Mackay

4740

QLD

 $      270,000.00

 $     377.50

7.27%

71

Halls Head

6210

WA

 $      340,000.00

 $     475.00

7.26%

72

Kingsley

6026

WA

 $      355,000.00

 $     495.00

7.25%

73

East Cannington

6107

WA

 $      323,000.00

 $     450.00

7.24%

74

Maddington

6109

WA

 $      287,500.00

 $     400.00

7.23%

75

Margaret River

6285

WA

 $      360,000.00

 $     500.00

7.22%

76

Greenfields

6210

WA

 $      288,000.00

 $     400.00

7.22%

77

Coconut Grove

810

NT

 $      350,000.00

 $     485.00

7.21%

78

Cockburn Central

6164

WA

 $      325,000.00

 $     450.00

7.20%

79

Clarkson

6030

WA

 $      325,500.00

 $     450.00

7.19%

80

Dudley Park

6210

WA

 $      275,000.00

 $     380.00

7.19%

81

Mahomets Flats

6530

WA

 $      218,000.00

 $     300.00

7.16%

82

Lockridge

6054

WA

 $      269,000.00

 $     370.00

7.15%

83

Whyalla

5600

SA

 $      171,000.00

 $     235.00

7.15%

84

Rosebery

832

NT

 $      350,000.00

 $     480.00

7.13%

85

Holloways Beach

4878

QLD

 $      255,500.00

 $     350.00

7.12%

86

Jubilee Pocket

4802

QLD

 $      307,000.00

 $     420.00

7.11%

87

Mundingburra

4812

QLD

 $      242,500.00

 $     330.00

7.08%

88

Deniliquin

2710

NSW

 $      155,000.00

 $     210.00

7.05%

89

Ascot

6104

WA

 $      370,000.00

 $     500.00

7.03%

90

Aitkenvale

4814

QLD

 $      225,750.00

 $     305.00

7.03%

91

West Gladstone

4680

QLD

 $      207,500.00

 $     280.00

7.02%

92

Freshwater

4870

QLD

 $      310,000.00

 $     417.50

7.00%

93

East Mackay

4740

QLD

 $      260,000.00

 $     350.00

7.00%

94

Cooee Bay

4703

QLD

 $      312,000.00

 $     420.00

7.00%

95

Glen Eden

4680

QLD

 $      260,000.00

 $     350.00

7.00%

96

Cairns North

4870

QLD

 $      306,250.00

 $     410.00

6.96%

97

Kin Kora

4680

QLD

 $      247,250.00

 $     330.00

6.94%

98

Port Douglas

4877

QLD

 $      360,000.00

 $     480.00

6.93%

99

Redlynch

4870

QLD

 $      315,000.00

 $     420.00

6.93%

100

Rockingham

6168

WA

 $      315,000.00

 $     420.00

6.93%

Source: Your Investment Property Magazine, data from April 2023

Image by Jorge Láscar on Flickr





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