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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

SuburbGross rental yieldWeekly median rent (Mar 2017)Median price (Mar 2017
Morwell8.3%$183$115,000
Sale7%$250$185,000
Moe6.9%$190$142,500
Mildura6.6%$230$180,500
Traralgon6.5%$240$193,000
Barinsdale6.3%$230$191,000
Maffra6%$230$200,000
Wendouree6%$235$203,000
Norlane5.8%$228$205,500
Golden Square5.7%$260$238,750
Sebastopol5.7%$240$219,000

Top regional yields for three bedroom homes

SuburbGross rental yieldWeekly median rent (Mar 2017)Median price (Mar 2017
Moe6.9%$220$166,500
Morwell6.7%$220$169,750
Bairnsdale6.6%$300$238,000
Stawell6.4%$230$187,500
Newborough6.2%$268$225,000
Shepparton6%$290$250,750
Horsham5.9%$250$219,500
Mildura5.9%$290$255,500
Hamilton5.7%$250$228,750
Sale5.7%$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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