$400/month win: Qld investor suburbs where rent easily pays your mortgage
New data shows Brisbane unit investors can earn double the rental return of houses – with cheaper zones performing best – but the results are blitzed by what’s coming out of Qld regions.
New data shows Brisbane unit investors can earn double the rental return of houses – with cheaper zones performing best – but the results are blitzed by what’s coming out of Qld regions.
PropTrack figures analysing monthly median rent versus mortgage repayments over the 12 months to January found gross rental returns on units in blue collar suburbs of Greater Brisbane beat even the highest amounts being cleared from houses there.
PropTrack economist Angus Moore said units tended to have better gross rental returns “in part because they’re more affordable to buy but the rent doesn’t fall by as much commensurately”.
But, he said, “the important caveat there is that these are gross rental yields, so it’s not accounting for costs like maintenance fees, strata fees, council rates, which for units can be quite significant”.
The best performer in the Qld capital region was Woodridge in Brisbane’s south, where a median priced unit ($238,000) could bring in $1,450 in monthly rent, easily clearing monthly mortgage repayments of $1,030, leaving $420 in gross rental returns.
Other blue collar type suburbs that are seeing the strongest rental returns were Kingston ($390), Slacks Creek ($380), Mount Warren Park ($360), Bethania ($360), Eagleby ($360), Logan Central ($350), and Waterford West ($330).
Inner city suburbs Brisbane City ($330) and Spring Hill ($310) were ranked eighth and ninth on the unit gross rental return list for the greater capital area.
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In comparison, only seven suburbs made the positive rental returns list for houses in Greater Brisbane – a nod to just how much median prices have soared across the entire SEQ market.
Laidley led for houses with $210 gross rental return a month, followed by Lowood ($100), One Mile ($80), Russell Island ($80), North Booval ($30), Riverview ($20), and Regency Downs ($20).
The data found gross rental returns from suburbs in regional Qld blitzed the greater capital, with the entire top 10 of houses, units and overall earning more than anything Brisbane can deliver.
“We often see that regional areas have higher gross rental returns, and higher gross rental yields, than capital cities,” Mr Moore said. “Traditionally that’s in part because of smaller rental markets and so they carry a bit of a premium to account for the risk of vacancy – not being able to find a tenant and sitting idle for a little while. That’s obviously less of a concern at the moment with extremely low vacancy rates across the country, but particularly in regional areas.”
Healy in Mount Isa, Woree in Cairns and Moranbah in the Isaac region had Qld’s strongest gross rental yields at a whopping $880 a month.
Manunda in Cairns was also solid ($760), as were Sunset and Soldiers Hill in Mt Isa ($750) m Moura in Banana Shire ($720), Westcourt in Cairns ($680), Parramatta Park in Cairns ($680) and Hermit Park in Townsville ($640).
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“Rental yields are obviously really important, particularly if you’re the sort of investor that’s looking for cash flow,” Mr Moore said.
But, he added, it was not the only thing investors were after.
“For other investors long term capital growth might be more important,” he said, “and so knowing your suburb and the prospect for price growth might be more important to you than a steady rental cash flow.”
He said it was also important to consider maintenance and other costs associated with the property.
“Obviously, we can’t pick what those are at a suburb level. It really depends on the property, but those can be significant and are a really important consideration when you’re looking at investing.”
