Yield of the regions

December 1, 2017 BY

REIV chief executive officer Gil King.

In the year to September 30, new REIV data shows every property type in regional Victoria recorded a higher gross rental yield than in metropolitan Melbourne.

Two-bedroom properties in regional Victoria delivered the strongest returns for investors, producing a gross rental yield of 5.1 per cent for units and 4.9 per cent for houses.

For those considering investing, the yield reflects a property’s annual rent as a percentage of the purchase price with the ideal investment property combining a low purchase price and a high weekly rental.

With a median house price of $120,000 and a weekly median rent of $193, two-bedroom houses in Morwell recorded one of the state’s highest returns at 8.3 per cent.

This was followed by Wangaratta in Victoria’s north east, where the same property type achieved a gross rental yield of 7.6 per cent.

Strong returns for two-bedroom houses were also seen in Echuca (6.9 per cent), Mildura (6.8 per cent), Traralgon (6.7 per cent) and Wonthaggi (6.2 per cent).

By comparison, in the sought-after Melbourne suburb of Albert Park, the gross rental yield was just 2.2 per cent on a two-bedroom house because, despite a weekly median rental of $650, the $1,535,000 median price held down the yield.

Meanwhile, three-bedroom houses also delivered solid returns for investors across the state, at 4.7 per cent.

Churchill produced the state’s highest rental returns for the typical family home, at 7.8 per cent, while Red Cliffs near Mildura also delivered a high yield of 7.6 per cent.

Other towns recording high yields for three-bedroom houses include Myrtleford (7.5 per cent), Mooroopna (7.2 per cent), Stawell (6.7 per cent) and Horsham (6.5 per cent).

While a high yield does not guarantee a property in a particular area will continue to perform well, it provides a useful guide for investors when deciding where and what type of property to buy.

For more information on median house prices and weekly median rents, head to reiv.com.au/market-insights.

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