Where to find the highest rental returns in Victoria

Date: 10 Aug 19

Where to find the highest rental returns in Victoria

Data modelling from the Real Estate Institute of Victoria (REIV) reveals that the highest rental yields in Victoria can be found in and around the CBD while some regional hot spots are returning surprisingly high returns.
REIV President Robyn Waters said Melbourne’s one-bedroom apartment market has the highest rental yield in the state.
“The REIV’s analysis shows that Melbourne’s one-bedroom unit market is the most profitable for investors with a rental yield of 6.7 per cent,” Ms Waters said.
“Considering that you only need to outlay $347,500 to buy a one bedroom apartment in the city, it is a great market for people to dip their toe into property investment and be confident of a tidy return of around $450 a week.
“The surprise result from this report was the prevalence of regional Victorian towns in the high rental yield list with three-bedroom houses in Moe generating a 6.6 per cent return and three-bedroom houses in Stawell returning 6.4 per cent.”
Rental yield is a measure of how much income an asset produces each year as a percentage of that asset’s value.
“Positive results for inner-city areas such as Melbourne, Southbank, South Yarra and Docklands are largely due to their appeal to CBD workers, higher education students and their families as well as retirees, all of whom value proximity to the CBD with all it has to offer and access to public transport,” Ms Waters said.
“The strong performance of regional towns is likely to be a product of low rental vacancy rates: demand for rental properties is at an all-time high and there is simply not enough stock on the market to meet demand in many areas. For example, the rental vacancy rate for the Latrobe Valley – South and West Gippsland is sitting at 1.3 per cent which could go some way to explaining high rental yields for many towns in the area in our analysis.
“Given recent interest rate cuts, APRA guidance to loosen lending standards and the result of the Federal Election which has delivered stability, the REIV is starting to see an upturn in investor activity which is likely to continue as we approach the spring selling season.”

Further information available at reiv.com.au/market-insights 

Media contact: Chanelle Pearson 0402 241 621                                                                             

Victoria’s highest rental yields

Suburb Dwelling Type Region Gross Rental Yield Weekly Median Rent (Jun 2019) Median Price (Jun 2019)
MELBOURNE 1-bedroom unit Metro 6.7% $450 $347,500
MOE 3-bedroom House Regional 6.6% $255 $200,000
STAWELL 3-bedroom House Regional 6.4% $240 $193,750
SOUTHBANK 1-bedroom unit Metro 6.2% $445 $373,000
MELBOURNE 3-bedroom unit Metro 6.2% $950 $801,000
SHEPPARTON 3-bedroom House Regional 6.2% $300 $251,000
WODONGA 3-bedroom House Regional 6.0% $325 $283,500
MILDURA 3-bedroom House Regional 5.7% $320 $289,999
MORWELL 3-bedroom House Regional 5.7% $200 $181,000
CHURCHILL 3-bedroom House Regional 5.6% $200 $185,000
SALE 3-bedroom House Regional 5.6% $290 $270,000
TRARALGON 3-bedroom House Regional 5.6% $300 $280,000
SOUTH YARRA 1-bedroom unit Metro 5.5% $400 $377,500
WARRNAMBOOL 3-bedroom House Regional 5.5% $350 $329,500
DOCKLANDS 2-bedroom unit Metro 5.4% $650 $630,000
MELBOURNE 2-bedroom unit Metro 5.4% $600 $575,000
WANGARATTA 3-bedroom House Regional 5.4% $310 $299,000
PRAHRAN 1-bedroom unit Metro 5.3% $390 $385,000
RICHMOND 1-bedroom unit Metro 5.3% $400 $393,500
SOUTHBANK 2-bedroom unit Metro 5.2% $580 $575,000