The outlook for property investors in Victoria has been put under the microscope recently. In September 2023, the Property Investment Professionals of Australia found Victoria was the worst of all eight states and territories for property investors, in the face of new land taxes introduced by the Andrews government.
Victoria remains an enduringly appealing place to live though, with Melbourne frequently ranking very well in global lists of the most liveable cities in the world. If you’re an investor interested in Australia’s second most-populated state, these are the suburbs with some of the highest rental yields.
Buying an investment property or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for investors.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.19% p.a. | 6.58% p.a. | $2,589 | Principal & Interest | Variable | $0 | $530 | 90% | Featured 90% LVR |
| |||||||||
6.29% p.a. | 6.20% p.a. | $2,473 | Principal & Interest | Variable | $0 | $0 | 80% | Featured Apply In Minutes |
| |||||||||
6.19% p.a. | 6.23% p.a. | $2,447 | Principal & Interest | Variable | $0 | $595 | 80% | |||||||||||
6.34% p.a. | 6.59% p.a. | $2,486 | Principal & Interest | Variable | $248 | $350 | 70% |
| ||||||||||
6.39% p.a. | 6.41% p.a. | $2,499 | Principal & Interest | Variable | $0 | $250 | 80% |
Property investing in Victoria in 2024
In 2024, property investors in Victoria have been significantly impacted by new land tax regulations, introduced as part of the Victorian Government's COVID debt repayment strategy. Since 1 January, an additional land tax surcharge has applied to people who own more than one property. For example, those who own an investment property where the land has an “unimproved value” of $500,000 have had to pay an additional $1,175 in land tax. This levy is expected to last for several years, as the state pays down Covid debts that at one point exceeded $30 billion. There has also been a notable increase in the absentee owner surcharge rate, which doubled from 2% to 4% for those who own property in Victoria and live outside the state.
All this has seen many investors think twice before looking to Victorian property. In October last year, Buyers Agency Propertyology announced it would be boycotting Australia’s second biggest state, until “significant improvement in the State Government’s attitude.”
This has seemingly flowed through to prices. Over the three months to February '24, property prices in Melbourne dropped 0.6%, after strong gains during the start of 2023. Dwelling prices in regional Victoria dropped 0.1% over the same period, with a 0.8% annual decline.
None of this necessarily means Victoria is a bad bet though. Rents in Melbourne and throughout the state continue to rise, which could partly be due to investors leaving the market. Higher rents could drive more renters to turn to home ownership, which could improve prices.
The state also remains an attractive place to live: last year, removalist platform Muval reported 25% of all interstate enquiries it received were for people relocating to Melbourne. In February '24, the median Melbourne property price gained 0.1%, the first time since October '23 when growth was positive, so it might be unwise to write Victoria off completely just yet.
Read more: Melbourne Suburbs to watch in 2024
Victoria rental yields in 2024
|
Median price |
Median weekly rent |
Median rental yield |
|
|---|---|---|---|
|
Houses (Metro) |
$902,500 |
$520 |
3.1% |
|
Units (Metro) |
$635,000 |
$500 |
4.3% |
|
Houses (Country) |
$580,000 |
$450 |
4.1% |
|
Units (Country) |
$410,000 |
$370 |
4.7% |
Source: CoreLogic. Data reported to the period ending November 2023. Median values account for sales transactions over three months.
Rental yields in Victoria, in both metropolitan and country areas, are comparatively lower than most other regions. Units in Darwin for example, have a median rental yield of 7% compared to 4.3% for metro Units in Victoria. When it comes to rural areas, only New South Wales has lower rental yields for houses and units than Victoria.
Part of this is likely due to the Victorian economy, which is more services-based than the likes of WA and Queensland. One of the biggest drivers of high rental yields is the population of transient workers, which is often relatively high in areas where the main industry is mining or agriculture. The high yields in regional Western Australia, for example, are often in resource rich areas, where workers temporarily live during mining projects, driving up rental demand, but without an equivalent demand for owner occupied property.
It’s also worth keeping in mind that the land taxes and absentee owner surcharges need to be factored in when considering the overall return from the property. Rental yields might represent some of the property’s value, but this could be offset by it being comparatively more expensive annually to own an investment property in Victoria than elsewhere.
Read more: Top rental yields in Australia
Highest rental yields in Victoria (Houses)
Two suburbs in Victoria stand significantly above the rest for yields. Ouyen, near the rural city of Mildura, and Nagambie, about 90kms west of Bendigo, both have a median rental yield above 9%. The next strongest, Warracknabeal, yields an average of just 6.93% each year.
Ouyen is a major agricultural centre, known for producing sheep as well as wheat, barley and oats. This might be one reason why rental yields are so high (workers moving to the area) but only temporarily. Nagambie is more of a tourist hotspot, which could also be driving up rates if more of the pool of potential rental properties is instead being used for short term accommodation like Airbnbs, reducing supply.
The majority of these properties, as tends to be the case with high rental yields, are in rural Victoria. The Bendigo suburb of Long Gulley is the only one of the top 25 in one of Victoria’s large cities.
|
Rank |
Suburb |
LGA |
Median property price |
Median weekly rent |
Rental yield |
|---|---|---|---|---|---|
|
1st |
Ouyen (3490) |
Mildura |
$180,000.00 |
$335.00 |
9.68% |
|
2nd |
Nagambie (3608) |
Strathbogie |
$650,000.00 |
$1,145.00 |
9.16% |
|
3rd |
Warracknabeal (3393) |
Yarriambiack |
$240,000.00 |
$320.00 |
6.93% |
|
4th |
Nhill (3418) |
Hindmarsh |
$229,000.00 |
$290.00 |
6.59% |
|
5th |
Lucknow (3875) |
East Gippsland |
$400,000.00 |
$500.00 |
6.50% |
|
6th |
Merbein (3505) |
Mildura |
$300,000.00 |
$360.00 |
6.24% |
|
7th |
East Bairnsdale (3875) |
East Gippsland |
$370,000.00 |
$430.00 |
6.04% |
|
8th |
Mooroopna (3629) |
Greater Shepparton |
$380,000.00 |
$427.50 |
5.85% |
|
9th |
Eagle Point (3878) |
East Gippsland |
$442,500.00 |
$495.00 |
5.82% |
|
10th |
Numurkah (3636) |
Moira |
$350,000.00 |
$390.00 |
5.79% |
|
11th |
Mortlake (3272) |
Moyne |
$350,000.00 |
$390.00 |
5.79% |
|
12th |
Red Cliffs (3496) |
Mildura |
$334,000.00 |
$370.00 |
5.76% |
|
13th |
Morwell (3840) |
Latrobe (Vic.) |
$330,000.00 |
$360.00 |
5.67% |
|
14th |
Heyfield (3858) |
Wellington |
$405,000.00 |
$440.00 |
5.65% |
|
15th |
Stratford (3862) |
Wellington |
$450,000.00 |
$480.00 |
5.55% |
|
16th |
Cobram (3644) |
Moira |
$407,500.00 |
$430.00 |
5.49% |
|
17th |
Wahgunyah (3687) |
Indigo |
$417,500.00 |
$430.00 |
5.36% |
|
18th |
Stawell (3380) |
Northern Grampians |
$340,000.00 |
$350.00 |
5.35% |
|
19th |
Long Gully (3550) |
Greater Bendigo |
$400,000.00 |
$405.00 |
5.27% |
|
20th |
Churchill (3842) |
Latrobe (Vic.) |
$350,000.00 |
$350.00 |
5.20% |
|
21st |
Kerang (3579) |
Gannawarra |
$275,000.00 |
$272.25 |
5.15% |
|
22nd |
Bairnsdale (3875) |
East Gippsland |
$450,000.00 |
$445.00 |
5.14% |
|
23rd |
Maffra (3860) |
Wellington |
$425,000.00 |
$420.00 |
5.14% |
|
24th |
Mildura (3500) |
Mildura |
$425,000.00 |
$420.00 |
5.14% |
|
25th |
Terang (3264) |
Corangamite |
$390,000.00 |
$385.00 |
5.13% |
Source: CoreLogic. Data reported to the period ending November 2023. Median values account for sales transactions over 12 months.
Highest rental yields in Victoria (Units)
Victorian units are unusual in that some of the suburbs with the highest rental yields are in Melbourne. For most of Australia, high rental yields tend to be in more remote areas, but Carlton, Melbourne CBD, Southbank and West Melbourne are all in the top ten for Victoria.
Part of this is likely due to the current property price/rent dynamic in Melbourne. In Carlton for example, unit prices dropped 15.5% from February ‘23 to January '24. Over the same period, rent grew by 16.3% (as per Realestate.com.au). While property prices in Melbourne have come off the boil in recent months, rental growth continues to be strong, which many observers would attribute to investors put off by excessive taxes and selling up. This has seemingly been particularly acute in the unit market.
|
Rank |
Suburb |
LGA |
Median Property Price |
Median Weekly Rent |
Rental Yield |
|---|---|---|---|---|---|
|
1st |
Carlton (3053) |
Melbourne |
$320,000.00 |
$475.00 |
7.72% |
|
2nd |
Melbourne (3000) |
Melbourne |
$410,000.00 |
$600.00 |
7.61% |
|
3rd |
Travancore (3032) |
Moonee Valley |
$339,500.00 |
$475.00 |
7.28% |
|
4th |
Red Cliffs (3496) |
Mildura |
$255,000.00 |
$305.00 |
6.22% |
|
5th |
Benalla (3672) |
Benalla |
$295,000.00 |
$350.00 |
6.17% |
|
6th |
Southbank (3006) |
Melbourne |
$530,000.00 |
$620.00 |
6.08% |
|
7th |
Cobram (3644) |
Moira |
$275,000.00 |
$310.00 |
5.86% |
|
8th |
Box Hill (3128) |
Whitehorse |
$455,000.00 |
$510.00 |
5.83% |
|
9th |
Ararat (3377) |
Ararat |
$290,000.00 |
$325.00 |
5.83% |
|
10th |
West Melbourne (3003) |
Melbourne |
$511,250.00 |
$570.00 |
5.80% |
|
11th |
Notting Hill (3168) |
Monash |
$390,000.00 |
$430.00 |
5.73% |
|
12th |
Abbotsford (3067) |
Yarra |
$500,000.00 |
$550.00 |
5.72% |
|
13th |
Heatherton (3202) |
Kingston (Vic.) |
$411,000.00 |
$450.00 |
5.69% |
|
14th |
North Melbourne (3051) |
Melbourne |
$480,000.00 |
$525.00 |
5.69% |
|
15th |
Flemington (3031) |
Moonee Valley |
$385,000.00 |
$420.00 |
5.67% |
|
16th |
Mooroopna (3629) |
Greater Shepparton |
$295,000.00 |
$320.00 |
5.64% |
|
17th |
Wollert (3750) |
Whittlesea |
$411,500.00 |
$445.00 |
5.62% |
|
18th |
Seymour (3660) |
Mitchell |
$325,000.00 |
$350.00 |
5.60% |
|
19th |
Cairnlea (3023) |
Brimbank |
$420,000.00 |
$450.00 |
5.57% |
|
20th |
Sale (3850) |
Wellington |
$341,250.00 |
$360.00 |
5.49% |
|
21st |
Essendon North (3041) |
Moonee Valley |
$410,000.00 |
$430.00 |
5.45% |
|
22nd |
Wodonga (3690) |
Wodonga |
$345,000.00 |
$360.00 |
5.43% |
|
23rd |
Docklands (3008) |
Melbourne |
$610,000.00 |
$635.00 |
5.41% |
|
24th |
Mildura (3500) |
Mildura |
$320,000.00 |
$330.00 |
5.36% |
|
25th |
Shepparton (3630) |
Greater Shepparton |
$340,000.00 |
$350.00 |
5.35% |
Source: CoreLogic. Data reported to the period ending November 2023. Median values account for sales transactions over 12 months.
Image by John Simmons via Unsplash.
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