Revealed: Suburbs with the highest rental yields in Queensland

Latest data has uncovered suburbs that are giving investors the highest rental yields across every Queensland region. SEARCH INTERACTIVES - HOUSES & UNITS

The top 10 pockets for highest rental yields in every Queensland region have been ranked as the state’s excruciatingly tight rental market delivers impressive gains to savvy investors.

Fortitude Valley was in front across metro Brisbane suburbs, the data collated by Ray White shows, with apartment owners there reaping yield of 6.7 per cent from a median sale price of $450,000.

Yield was calculated by dividing the annual rental income by the suburb’s median sale price, but does not take into account outgoing costs such as loan repayments and maintenance.

Brisbane City and the inner pockets of Milton and South Brisbane were also among highest yielding suburbs, delivering returns of more than 6 per cent on unit values of $466,525 to $546,500.

Other city hotspots were Kelvin Grove, Newstead, Spring Hill and Bowen Hills, while further out, units in Stafford and Bald Hills recorded median rental yield nudging 6 per cent over the past 12 months.

Ray White senior data analyst Jemima White said high yields across Brisbane hotspots were driven by blistering rent price growth of around 20 per cent, coupled with slower unit price growth over the same period. Properties yielding 5 per cent or above are more likely to be delivering cash-positive returns to investors.

Ray White data analyst Jemima White

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“Rental yields are an important factor for certain types of property investors when making their purchasing decision, particularly those focused on generating a cash flow from their investment,” Ms White said.

“Investors may expect to continue seeing higher yields in the near future as a struggling construction industry will mean growth in Brisbane’s unit rental stock may not be significant to accommodate this high persistent demand.”

Across Greater Brisbane, units in the Logan suburbs of Woodridge and Bethania priced at $292,929 and $370,000 yielded about 6.5 per cent, and 6.3 per cent in Rockville, Toowoomba.

The Gold Coast’s top spots were houses in Staplyton (7.5 per cent) and units in Helensvale (6.4 per cent).

The Sunshine Coast’s highest yields over 5 per cent were in Parrearra and Battery Hill.

Far North Queensland emerged as a cash flow beacon, with yields about 9 per cent in the Cairns suburbs of Woree, Bungalow and Earlville, as well as Cranbrook, Currajong and Hyde Park in Townsville.

Michael Hatzifotis of Place - Kangaroo Point

Michael Hatzifotis, of Place Estate Agents Kangaroo Point, said more investors were holding onto their assets in a reversal of the trend of the last two years, which saw landlords sell up amid rising interest rates and legislative reforms.

“That situation has calmed down a lot from a year ago when interest rates were going up and up and up and investors were dropping like hot cakes,” Mr Hatzifotis said.

“These high yields resulting from rising rents have counteracted that and the only time investors are selling now is to buy something else.”

Two-bedroom, two-bathroom unit at 58/57 Grand Pde, Parrearra sold for $672,000

One and two-bedroom apartments were most in demand, and were generally rented within one to two days of being listed, with rent prices increased an average of 10 per cent whenever a lease was renewed.

As the Reserve Bank of Australia (RBA) kept interest rates on hold at 4.35 per cent for the sixth consecutive month, buyers were more motivated to make a move as prices continued to rise, according to a national survey by InfoTrack.

More than 30 per cent of homebuyers said interest rates did not influence their decision to buy.

A four-bedroom, two-bathroom townhouse at 49/26 Radke Rd, Bethania sold for $610,000

Lutwyche homebuyer Tom McGuigan, 27, said rising prices and tough competition prompted him to purchase a two-bedroom unit in the inner Brisbane suburb as soon as he had a deposit.

“Rapidly rising rents further incentivised me to buy and pay off a loan rather than pay off someone else’s mortgage at an overly inflated price,” Mr McGuigan said.

“In the two to three months that I was looking, properties were going up $5-10,000 per month, and they are still rising now. I was looking for a two-bedroom apartment and knew a house within the Brisbane metro area was not even an option for the price I wanted to pay,” he said.

Three-bedroom, two-bathroom apartment at 10/72-76 Digger St, Cairns North sold for $437,000

Outside of metro areas, volatile mining towns offered yields of more than 10 per cent, but Ms White warned investing in these areas was risky.

“Larger mechanisms such as soft capital growth, low rental property stock and population growth found in some inner city regions, that increase rental yields, can be more predictable and persistent than the economic cycles of the mining industry,” Ms White said.

“While yields in these suburbs aren’t as high, they can be less risky for investors. Ultimately the importance of rental yield depends on the individual investor’s goals and risk tolerance.”

A three-bedroom, two-bathroom townhouse at 26/33 Moriarty Pl, Bald Hills sold for $630,000

Top-performing suburbs in regional Queensland included Scottsville and Collinsville for houses (11 per cent yield), and Middlemount and Moranbah for units (14 and 12 per cent respectively).

More than a third of people in those towns were employed in nearby coal mines, reflecting the volatility of rental demand that is driving yields in these areas.

“Excluding volatile mining towns there is less of a defined trend. Generally areas with very low incomes have high yields but do not see strong capital growth,” Ms White said.

The outlying enclave of Russell Island topped the Greater Brisbane region, recording a median house rental yield over the past 12 months of 6 per cent.

A two-bedroom, two-bathroom apartment at 1306/12 Cunningham St, Newstead sold for $750,000