High rental returns in regional Victoria

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.

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