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Ben covers the property industry and has a keen interest in entrepreneurship and travel writing. He speaks Mandarin and previously covered housing and urban affairs for The Australian Financial Review.

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Where the yields are: Carlton, Fairfield, league leaders for residential rental returns

Published 24 April 2013 11:16, Updated 01 May 2013 10:46

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Where the yields are: Carlton, Fairfield, league leaders for residential rental returns

Apartments at 33/8-10 Northumberland Road, Auburn in Sydney. Auburn is Sydney’s third-best yielding suburb for rents, with a gross rental yield of 6.4 per cent.

Once affordable middle-ring suburbs in Australia’s eastern capitals are delivering high rental yields to investors, analysis by RP Data finds.

In a joint project with online lender, loans.com.au, RP Data has identified 582 suburbs across Australia with gross yields of 5.5 per cent or more, making them easier to hold long-term in a low capital gain environment.

Sydney

Sydney’s best yielding suburb is Fairfield, adjacent to the fast-growing Parramatta CBD, where apartments are returning a gross yield of 6.5 per cent, according to the analysis, titled Autumn Investors Guide to Australia.

Rents in Fairfield soared during the latest ABS Census period of 2006 to 2011 despite tepid house price growth. An analysis of census figures last year by The Australian Financial Review found more than a quarter of Fairfield households were paying more than 30 per cent of their income in rent - a measure broadly accepted as experiencing rental stress.

Middle and outer ring Sydney suburbs with low median home values, like Warwick Farm, Auburn and Mount Druitt, dominate RP Data’s list for high-yielding suburbs.

Sydney’s Top 5 yielding suburbs

Suburb LGA Property Type Median price Median rent 5 year av Gross yield
Fairfield Fairfield Unit $261,011 $350 7.4% 6.5%
Warwick Farm Liverpool Unit $226,475 $290 8.8% 6.4%
Auburn Auburn Unit $319,983 $390 7.2% 6.4%
Mount Druitt Blacktown Unit $248,062 $330 9.5% 6.3%
Willmot Blacktown House $232,786 $300 7.4% 6.3%
Source: RP Data

Victoria

In Melbourne, units in the inner suburb of Carlton had the highest rental yields , with a gross yield of 7.4 per cent, the analysis found.

Carlton was another suburb identified as having high levels of rental stress after soaring rental growth during the Census period. But most Victorian areas identified as high-yielding were outside of Melbourne, in areas like Red Cliffs, about 550 kilometres north-west of the capital, and the farming community of Mildura.

Victoria’s Top 5 rental yields

Suburb LGA Property type Median price Median rent Gross yield
Carlton Melbourne Unit $235,170 $400 7.4%
Red Cliffs Mildura House $147,983 $238 7.0%
Mildura Mildura Unit $138,566 $195 6.9%
Merbein Mildura House $146,178 $200 6.6%
Horsham Horsham House $186,822 $250 6.6%
Source: RP Data

Queensland

The analysis also identifies potential capital growth suburbs in south-east Queensland, where residential property is picking up after a difficult few years following the financial crisis.

Houses in the historic town of Grandchester, about 80km west of Brisbane, had a compounding growth rate of 7.7 per cent over the past five years, the analysis found. Other relatively strong performers were apartments in Marsden and Kingston in the Logan City local government area.

Queensland’s fastest growing suburbs

Suburb LGA Property type Median price Gross yield
Grandchester Ipswich House $376,724* 7.7%**
Marsden Logan Unit $293,584* 7.0%**
Kingston Logan Unit $260,102* 6.9%**
Caboolture Moreton Bay Unit $240,290* 6.6%**
Upper Brookfield Brisbane House $877,166* 4.9%**
** 5 year annual growth in value * Median house prices over 5 years Source: RP Data

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