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High rental returns in regional Victoria
Property investors looking for high rental returns may be better served purchasing property in regional Victoria than Australia’s capital cities.
According to new data from the Real Estate Institute of Victoria (REIV) rents in Victoria’s country areas yielded higher profits for investors compared to the average mortgage repayments than rents in the state’s metro zones.
The best performers from the REIV data were two and three-bedroom homes in regional Victoria, with rental returns for investors of 5.3 and 4.9 per cent respectively – significantly higher than rental returns for the same property types in metro Melbourne, which were 2.7 and 3 per cent respectively.
Looking at specific regions, in the year to March, two-bedroom homes in Sale produced a rental return of 7 per cent, while three-bedroom homes in the Gippsland towns of Moe, Morwell and Bairnsdale recorded yields of more than 6.5 per cent over the same period.
Top regional yields for two-bedroom homes
| Suburb | Gross rental yield | Weekly median rent (Mar 2017) | Median price (Mar 2017 |
|---|---|---|---|
| Morwell | 8.3% | $183 | $115,000 |
| Sale | 7% | $250 | $185,000 |
| Moe | 6.9% | $190 | $142,500 |
| Mildura | 6.6% | $230 | $180,500 |
| Traralgon | 6.5% | $240 | $193,000 |
| Barinsdale | 6.3% | $230 | $191,000 |
| Maffra | 6% | $230 | $200,000 |
| Wendouree | 6% | $235 | $203,000 |
| Norlane | 5.8% | $228 | $205,500 |
| Golden Square | 5.7% | $260 | $238,750 |
| Sebastopol | 5.7% | $240 | $219,000 |
Top regional yields for three bedroom homes
| Suburb | Gross rental yield | Weekly median rent (Mar 2017) | Median price (Mar 2017 |
|---|---|---|---|
| Moe | 6.9% | $220 | $166,500 |
| Morwell | 6.7% | $220 | $169,750 |
| Bairnsdale | 6.6% | $300 | $238,000 |
| Stawell | 6.4% | $230 | $187,500 |
| Newborough | 6.2% | $268 | $225,000 |
| Shepparton | 6% | $290 | $250,750 |
| Horsham | 5.9% | $250 | $219,500 |
| Mildura | 5.9% | $290 | $255,500 |
| Hamilton | 5.7% | $250 | $228,750 |
| Sale | 5.7% | $290 | $265,000 |
While these figures show that buyers can enjoy higher rental yields by investing in regional Victoria, many borrowers are understood to be investing in Australia’s capital cities with the goal of profiting through capital gains instead, as discussed earlier this year by the governor of the reserve bank.
Disclaimer
This article is over two years old, last updated on May 26, 2017. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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