The Top 5 Highest Yielding Suburbs in Australia for Savvy Property Investors

Investing in property can be a smart way to grow wealth, especially if you know where to look. Focusing on suburbs that offer high rental yields is essential for maximising your returns.

This guide highlights the top five suburbs in Australia that provide the best rental yields, equipping property investors with valuable insights for informed decision-making.

Why Focus on Rental Yields?

When it comes to real estate, rental yield is one of the most important numbers to consider. High rental yields mean strong demand for rental properties, which leads to better cash flow.

A rental yield above 5% is often seen as attractive because it can ensure a steady income. This is especially vital during economic downturns when property owners seek dependable rental income. Many savvy investors target suburbs known for high rental returns.

Top 5 Highest Yielding Suburbs in Australia

1. Nickol, Western Australia (Rental Yield: 10.42%)

The typical price for houses in Nickol stands at $596,808. This indicates a relatively stable price point in the suburb, which is a positive sign for potential investors looking for long-term value growth.

With a median rent of $1,197 per week, the rental income potential appears solid, particularly given the calculated yield. An impressive yield of 10.43% far exceeds the minimum recommended yield of 3%. This suggests that properties in Nickol can generate robust returns for investors, making it a compelling investment choice.

However, the renter/owner ratio sitting at 67% is a significant concern. This indicates a high proportion of renters, which can signal instability in long-term property value appreciation, especially if the trend continues.

Nickol shows promising attributes as a property investment due to its high yield and low vacancy rates. However, potential investors should remain cautious of the high renter presence and balance their investment strategies accordingly. Always seek professional advice to navigate the complexities of the property investment landscape thoroughly.

2. Bulgarra, Western Australia (Rental Yield: 10.33%)

Bulgarra presents an intriguing investment landscape for property buyers and investors. Analysing the current data, we can see both strengths and weaknesses.

The typical price of houses in Bulgarra is $505,896. This price point provides a moderate entry for investors looking to tap into the local market.

The median rent is $1,005 per week, which translates to a significant rental income potential. With a yield of 10.33%, Bulgarra stands out as an attractive option since this is well above the recommended minimum yield of 3%. This high yield indicates that rental income is quite robust compared to purchase prices.

The ratio of renters to owners is 47%, which suggests an unfavourable balance with more renters likely leading to market volatility. With an inventory of only 0.62 months, it is evident that properties are selling quickly, which signals strong buyer interest and market heat.

Bulgarra offers some promising opportunities for property investments, but it is essential to remain vigilant about the nuances present in the current metrics and trends for a comprehensive assessment of potential risks and rewards.

3. Millars Well, Western Australia (Rental Yield: 9.85%)

Millars Well offers a unique landscape for property investment with its current set of metrics. The typical price of houses in Millars Well is $513,420. This price level offers a moderate entry for investors aiming to access the local market.

The yield of 9.85% significantly exceeds the minimum recommended value of 3%. This indicates a robust income potential for landlords, making it an attractive option for rental investments.

The affordability index is well below the threshold of 30 years (currently sitting at 15 years), suggesting that properties in Millars Well are relatively affordable for average income earners. With an IRSAD score of 1059, it's above the minimum recommended value. This suggests better access to socio-economic resources in the area.

The renter to owner ratio is at 61%, categorised as unfavourable. This high ratio may indicate a potential over-saturation of rental properties, which could lead to future competition among landlords. With an average of 57 days on the market, this neutral statistic indicates that properties may take a moderate amount of time to sell, reflecting a balanced demand and supply situation.

Millars Well presents a compelling case for property investment, particularly in the rental market. The high yield and affordability make it attractive, though potential investors should be wary of the renter/owner ratio and lack of recent approvals. Diversifying strategies and careful market observation will be crucial for successful ventures in this suburb.

4. Pegs Creek, Western Australia (Rental Yield: 9.78%)

Pegs Creek presents a unique investment opportunity for those looking to enter the property market. The average price for houses stands at $470,482, indicating that properties in this suburb are relatively affordable, especially considering the high rental yield.

Rental prices average $885 per week, which aligns well with the typical price for houses, making it an attractive market for landlords. A gross rental yield of 9.78% is exceptionally high, well above the recommended minimum of 3%. This strong yield is attractive for investors looking for cash flow from rental properties.

With a renter-to-owner ratio of 56%, this figure is considered unfavourable, implying that renters significantly outweigh homeowners in the area. This dynamic can lead to potential challenges in property appreciation over time.

The low stock on market figure of 0.37% is opportune, suggesting a potential seller's market where demand exceeds supply. With an inventory standing at 1.34 months, this indicates a strong absorption rate of available properties. A lower inventory level often indicates increased demand.

However, it's important to note that the confidence in data is currently low, which could lead to variations in projected outcomes. Pegs Creek presents a mix of promising investment attributes, along with some concerns to be mindful of.

5. Baynton, Western Australia (Rental Yield: 9.63%)

Baynton presents an intriguing investment opportunity, especially for those looking at the house market. The typical price for houses stands at $655,704, which reflects a healthy market for investment.

The median rent is $1,214 per week, indicating strong rental demand. With a gross rental yield of 9.63%, Baynton shows an impressive return on investment potential, significantly higher than the minimum recommended yield of 3%. This suggests that investors could expect solid cash flow from rental properties.

The ratio of renters to homeowners is 63%, which falls into the unfavorable range. This high percentage of renters indicates a dependent rental market and might also suggest less long-term stability for property values compared to owner-occupied areas.

With an affordability index of 17 years, the area remains within a manageable range below the threshold of 30 years, enhancing its attractiveness to potential buyers. Average days on market at 50 days is neutral, suggesting that properties are selling within a reasonable timeframe but may not be moving at a rapid pace.

Given the data indicating low building approvals, there could be opportunities for renovation or development on existing properties that can enhance value over time.

Strategies for Investing in the High Rental Yield Properties

1. Do Your Homework: Investigate local market dynamics. Look into factors like population growth, upcoming infrastructure, and the job market, all of which can affect rental yield.

   
   

2. Hire a Buyers Agent: A qualified buyers agent can provide valuable insights on emerging suburbs. They help you find properties that meet your investment needs and offer guidance throughout the buying process.

   
   

Smart Investing in Australian Property

Understanding where to find the highest yielding suburbs in Australia can greatly enhance your property investment strategy. From the stunning landscapes in Cairns to the cultural richness of Adelaide, there are numerous opportunities across Australia.

Real estate investing requires careful planning and attention to detail. By focusing on high rental yield suburbs and seeking guidance from professionals, you can make informed decisions that benefit your investment portfolio.

Remember, success in property investment is about knowledge and strategy. Whether you are an experienced investor or just starting out, knowing these thriving suburbs can pave the way for fruitful investment decisions.

If you're looking for a buyer’s agent or qualified property investment adviser (QPIA®) to assist you with purchasing a home or investment property in NSW, QLD, VIC, SA or WA, please get in touch with our team at Ready Set Buy - Property Buyer's Agents or give us a call on 1300 289 372!

Disclosure: The information contained in this blog is our personal opinion only and is not to be taken as financial advice, as we do not know your financial situation. Property markets are volatile and all investments carry risks. Please speak with your accountant or any other licensed professional for specific advice based on your own personal circumstances. We will not be held liable for any losses.