Smart Property Investment gathers the latest market data to identify suburbs that deliver the highest yields across all Australian states and territories, including New South Wales, Queensland, Victoria, Western Australia, Northern Territory, South Australia, Tasmania and the Australian Capital Territory.
If you’re looking for suburbs with strong rental yield as well as capital growth potential, REA data says these Aussie hot spots are ripe for investment.
As interest rates in Australia continue to rise, property investors are faced with a challenging market. However, there are still opportunities for investors to make smart property decisions that will yield strong returns in the long run.
One of the key considerations for investors in a rising interest rate market is the potential impact on mortgage repayments.
As interest rates rise, mortgage repayments may increase, putting pressure on investors who are relying on rental income to cover their expenses.
To mitigate this risk, investors may need to adjust their investment strategy and consider alternative options, such as investing in more affordable properties, exploring different loan structures, or seeking out higher rental yields to offset potential increases in mortgage repayments and ensure the property remains profitable.
Understanding your options when investing can be confusing, but speaking to a lender can help. Picture: Getty
Bankwest spokesperson Stephen Harper says those looking to invest in a rental property could find financial advantages in doing so, but to do the groundwork first and understand your current financial situation.
“Buying an investment property is a little different to buying your first property as there’s more to think about when it comes to your strategy and objectives,” Stephen says.
“There's also different loans available, depending on what you're planning for your second property.”
“If you have multiple loans or properties, it might be worthwhile reaching out to your lender or broker, who can help explain navigate the process and give you an idea of what your finances might look like after,” Stephen adds.
So, for investors chasing steady income, these are some of the suburbs generating the highest rental yield for units.
Top suburbs around Australia to invest
Perth
Orelia, WA
With a median unit price of $186,000 [up 12%], and a rental yield of 9.1% – it is little wonder Orelia has been pegged as one to watch.
The leafy suburb, about 30km south of Perth’s CBD, is well serviced by freeways and public transport, and offers an affordable entry point for investors seeking to minimise risk.
Armadale, WA
A little further east, you’ll find Armadale, one of the fastest-growing local government areas in Australia. A unit in this burgeoning locale will set you back, on average, $285,000 [up 8.8%], with a rental yield of 7.3%.
Glendalough, WA
Glendalough, just 6km north of Perth’s CBD, has experienced significant growth in the past 12 months, with the suburb’s median house price jumping by more the 60%.
Perth is quickly becoming an investor hotspot with good prices and high rental yields. Picture: Getty
Despite soaring house prices, you can still pick up a unit in this inner suburban gem for $287,000, and yielding 7% per annum.
Adelaide
Salisbury, SA
If you’re looking for a suburb that offers both high rental yield and strong capital growth potential, Salisbury, in Adelaide’s north, is worth considering.
Gentrification has pushed unit prices up 20% in this cosmopolitan melting pot, but you can still pick up a property with change from $500k and average 6.2% yield.
Findon SA
Unit price growth outpaced houses in this up-and-coming real estate hot spot.
Located just 6.5 kilometres north west of the Adelaide CBD, and with easy access to the airport, major arterials and the beach, Findon presents a unique opportunity for a savvy lifestyle investor.
You’ll average 5.9% yield on a unit in Findon, with an average purchase price of $475,000.
Kurralta Park, SA
Located just 10 mins to the CBD, the beach and the airport you’ll find Kurralta Park.
This south west suburb saw capital gains of 18% for units and nearly 20% for houses in the past 12 months, with average rental yields of 6%.
The average unit it Kurralta Park will set you back $360,000, making it an attractive option for investors who have their eyes set on the City of Churches.
Sydney
Penrith
Sydney might have a more inflated property market than the rest of the country, but the city still offers investors plenty of profitable opportunities.
Take Penrith, in the city’s west, for example. The average cost of a unit in Penrith costs $540,000, with a rental yield of 4.3%.
Sydney's western suburbs are attracting investors thanks to a growing population which increases demand for rentals. Picture: Getty
But, over the past five years, units in the riverside suburb have bucked a downward trend and enjoyed a compound growth rate of 1.9%.
Liverpool
Another popular investor suburb in the Greater Western Sydney area is Liverpool. Though nearby suburbs such as Warwick Farm and Auburn boast higher gross rental yields.
Liverpool – with an average unit price of $472,000 and a yield of 4.7%– differs from these areas in that it has also returned a compound growth rate of 1.5% for units.
Melbourne
Werribee South
If you’re looking for a more affordable investment option, Werribee South, in Melbourne’s west offers plenty of promise.
Units in the seaside suburb rent for $360p/w with a rental yield of 4.4%.
A lower cost of entry is also an attractive factor, with units selling for an average of $450,000.
Caulfield South
While entry into this affluent, blue-chip suburb will set you back close to $1m, Caulfield South ticks plenty of boxes.
As well as attractive rental yields [4% for units] and strong capital growth, when averaged out over five years, units in the area have also seen a compound growth rate of 17.7%.
Carlton
If you’re looking for a solid rental return in a perennially popular suburb, Carlton, on the CBD fringe, is one of the city’s highest-yielding suburbs.
On the city doorstep, Carlton - one of Melbourne's most affluent suburbs - offers investors great opportunities. Picture: Getty
With a strong lifestyle drawcard, as well as myriad public transport connections and easy access to universities, hospitals and trendy shopping and dining precincts, it’s easy to see why units in Melbourne’s ‘Little Italy’ returns a respectable 6% rental yield.
Brisbane
West End, QLD
Brisbane is one of the fastest-growing cities in Australia, with a growing population and a strong economy.
And the trendy dining and nightlife hub that is West End is one of its up-and-coming neighbourhoods.
If you’re looking for an investment property, units in West End will deliver yields of 5.4% based on an average purchase price of $615,000.
The suburb has also experienced a compound growth rate of 8.3% per cent for units over the past five years.
Kingston, QLD
Another suburb that has seen exponential growth over the past five years in Kingston, in Brisbane’s south west, could pay generous property dividends.
Though the suburb is experiencing significant capital growth, you can still pick up a unit for less than $300,000, yielding 6.5%.
This article was originally published on 25 Jul 2023 at 11:18am but has been regularly updated to keep the information current.
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