The QLD towns enjoying rental yield boom after downturn bust

They were some of the hardest hit suburbs during the resources downturn but after a decade in the real estate doldrums, investors are once again reaping rewards for their risk-taking ventures.

They were some of the hardest hit suburbs during the resources downturn but after a decade in the real estate doldrums, investors are once again reaping the rewards for their risk-taking ventures.

Many of Queensland’s top spots for rental yields are also among the state’s most affordable suburbs to buy in right now, but they are also locations that know only too well the boom and bust cycles.

Units in Rosslea, a suburb of Townsville, have the strongest rental yields in Queensland, according to the annual News Corp Australia/PropTrack Make Your Move report.

There, landlords are reaping a median rental yield of 8 per cent, with a median unit price of $205,000.

Rental yields are calculated when outgoing costs such as loan repayments and maintenance are deducted from rent income.

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A unit in this Mabin Street, Rosslea, complex is listed for $195,000 negotiable

A decade ago, units in Rosslea had a median value of $230,000, with that plunging to $175,000 just three years ago.

Explore Property Townsville director Giovanni Spinella, whose agency has almost 900 properties on their rent roll, said low vacancy rates were pushing up rents and yields.

He said the uptick was a welcome one after the resources downturn, which also saw one of the city’s biggest employers, Queensland Nickel, close its doors.

“We have seen solid population growth over the past two years and there is good job opportunities which are leading to a supply and demand effect,” he said.

“There is a lot of interstate investor interest, with calls for houses in suburbs like Kirwan, but there has also been a real change in perception around units that offer an affordable alternative for renters and investors.”

Rosslea was closely followed by rental yields of 7.9 per cent in Charters Towers (houses) and Cairns North (units).

This entire block of six units at Yorkeys Knob is listed for offers over $875,000

Of the top 20 suburbs for rental yields across regional Queensland, 18 house suburbs had median values below $300,000, while there were 12 unit suburbs.

Moranbah, which was the centre of a housing crisis during the mining boom and then suffered a whopping price crash, has the second highest rental yield for houses – a very healthy 7.8 per cent.

A decade ago, the mining town had the second highest median house price outside of southeast Queensland – a staggering $720,000 – as demand outstripped supply.

During the mining boom in Moranbah, new houses were constructed, which then led to a glut of properties when the resource downturn hit.

Back then it was more expensive to buy in Moranbah than in Airlie Beach ($660,000), and it was second only to Townsville’s Castle Hill ($1,112,500).

Back in 2011, this low set three bedroom home in Moranbah was listed for $900 a week.

Today, the median house value in Moranbah is $327,500, which is a vast improvement on the $154,500 it was just five years ago.

The streets of Moranbah were deserted after widespread job cuts in the nearby mines in 2009. Mark Calleja.

AH Realty Moranbah principal Annemarie Haywood said there had been “many tears shed” so it was positive to see that turning around.

She said mining activity had ramped up again, and workers and families were moving in.

“I’m getting calls from investors, mostly out of Sydney, Melbourne, Western Australia, on a daily basis,” she said.

“It is not quite where it was during the last boom, but I think it could get there within the next year or two.

“Eighty per cent of my rent roll is taken by companies who need places to house workers.”

A furnished six-bedroom house in Moranbah that sold to investors for $375,000 in April is now for rent on a “POA” basis and a bond of $5600, which equates to $1400 a week.

67 Cuthbert Street, Moranbah, is listed for rent on a POV basis, with a bond of $5600

Another house, which is listed for sale for $558,000, is for rent for $900 a week. It sold for $697,000 during the boom, and then again for $397,000 in 2019.

Ms Haywood said she hoped conditions did not return to those experienced during the last boom, when rents skyrocketed, workers were forced to hot bed and essential workers were priced out.

“I think a lot of lessons were learned back then,” she said.

Rio Tinto worked with the Clermont community to deliver affordable housing during the last boom, when vacancies were non-existent and prices soared. Photo: Tara Miko / CQ News

In nearby Clermont, the median house price is $240,000 but the rental yield is 7.1 per cent.

To put that in perspective, the top rental yields in the Greater Brisbane area can be found at Laidley (6.1% for houses) and Woodridge (7.7% for units), both among the regions most affordable suburbs.

Rental yields of 7.8 per cent are also being achieved in Rockhampton City, Miles and Home Hill.

Elsewhere, the other top house suburbs for rental yields can be found in the Townsville region (Ingham, Heatley, Richmond Hill, Vincent and Rasmussen), Central Queensland (Bereserker, Koongal, Park Avenue, Kawana and Biloela), the Queensland Outback (Healy, Longreach) and Darling Downs-Maranoa (St George).

A unit in this Mabin Street, Rosslea, complex is listed for $195,000 negotiable

For units, suburbs earning rental yields north of 6.6 per cent can be found in Townsville, Cairns, Mackay-Isaac-Whitsunday, Central Queensland and Wide Bay.

And while demand for house rentals in regional Queensland is strongest on the Gold Coast, with 10 of the top 20 suburbs for demand located in the tourist mecca, affordable suburbs in Townsville (Currajong, Vincent, Garbutt) are also strong performers.

PropTrack named Innes Park (Wide Bay) as the top spot for investors to watch, with the suburb ticking all three boxes for capital growth, rental yields and demand.

Pitched to investors, 13 Memory Boulevard, Innes Park, is listed for offers over $449,000. It has two self-contained levels, both with two bedrooms

PropTrack economist Angus Moore said regional areas often carried higher rental yields which compensated for vacancy risks during downturns.

He added that the rewards could be high, but investors needed to more closely monitor regional markets than they would the more stable metro markets.

“Regional Queensland has really been a story of coastal areas, if you look at the best performing areas across our metrics (capital growth, rental yield and demand),” he said.

Bulletproof Investing author James Fitzgerald said that investing in boom and bust regions was not for the faint-hearted.

“They tend to be very volatile markets, with big increases and big drops,” he said, likening it to monitoring the stock market.

“They just aren’t as stable as bigger towns with more diverse economies and population growth.

“They (investors) need to be able to ride out any downturns or be willing to monitor the market closely so they can buy in and sell out at the right times.”

Originally published as The QLD towns enjoying rental yield boom after downturn bust