Where rental yields have risen most in our capital cities

Megan Lieu
Megan Lieu

Gross rental yields have increased across the country as a result of rent growth exceeding home price growth over the past 12 months, with yields in some suburbs increasing by more than 30%.

Gross rental yield is the total annual rental income received from a property, which is expressed as a percentage of the property’s purchase cost. The higher the yield, the better.

According to PropTrack's March Rent Report, national rental yields have increased 0.4 percentage points from 4% to 4.4% from March 2023 to March 2024.

The growth in yields was driven by capital city areas which increased from 3.9% to 4.3% over the same period. Yields in combined regional areas only experienced a slight increase from 4.5% to 4.6%.

Across the country, weekly rents have risen at a much higher rate than home prices in recent times, which is a key reason for the strong upward trend in yields. This has been especially prominent in our capital cities.

When we look at the suburbs in our capitals with the largest annual increase in gross rental yields, this becomes quite evident, as many of their yields have surged by three times the national rate.

Houses in Brooklyn in Melbourne's west and Aberfeldie in inner Melbourne both encountered a 38% rise in their median gross rental yields over the past year. This was the highest among all suburbs in the country. rate

Suburbs with the largest yearly increase in rental yield - House

Suburb State SA4 Median gross rental yield 12 month % change in median rental yield
Brooklyn VIC Melbourne - West 3.7% 38%
Aberfeldie VIC Melbourne - Inner 2.5% 38%
Kenthurst NSW Sydney - Baulkham Hills and Hawkesbury 1.8% 35%
North Curl Curl NSW Sydney - Northern Beaches 2.8% 34%
Villawood NSW Sydney - Inner South West 4.0% 32%
Fairfield VIC Melbourne - Inner 2.8% 30%
Edithvale VIC Melbourne - Inner South 2.9% 30%
Yeronga QLD Brisbane - South 3.4% 28%
Bilgola Plateau NSW Sydney - Northern Beaches 2.7% 28%
Sunshine North VIC Melbourne - West 3.5% 27%
Source: PropTrack. Excludes suburbs with <30 rentals in the 12 months to March'24.

Kenthurst, North Curl Curl and Villawood houses in Sydney were close behind with respective increases in rental yields of 35%, 34% and 32%, respectively since March 2023.

Investors in Yeronga in Brisbane's south also received higher gross yields. They were 28% higher compared to 12 months prior.

For units, Lathlain in south east Perth and Eastlakes in Sydney's City and Inner South region claimed the top spot for rental yield growth. Yields rose by around a third of their previous value to hit 6.4% and 5.2% respectively.

Suburbs with the largest yearly increase in rental yield - Unit

Suburb State SA4 Median rental yield 12 month % change in median rental yield
Lathlain WA Perth - South East 6.4% 35%
Eastlakes NSW Sydney - City and Inner South 5.2% 31%
Kingsgrove NSW Sydney - Inner South West 4.5% 30%
Millers Point NSW Sydney - City and Inner South 3.8% 30%
Villawood NSW Sydney - Inner South West 5.9% 29%
St Kilda West VIC Melbourne - Inner 5.0% 28%
Caulfield East VIC Melbourne - Inner South 9.5% 27%
Murrumbeena VIC Melbourne - Inner South 5.3% 27%
Turrella NSW Sydney - Inner South West 5.6% 27%
Lakemba NSW Sydney - Inner South West 6.3% 26%
Source: PropTrack. Excludes suburbs with <30 rentals in the 12 months to March'24.

Kingsgrove and Millers Point units experienced a surge in their gross rental yields as well. They are now 30% greater than March 2023.

A number of Melbourne suburbs experienced the greatest increase in rental yields. Picture: Getty

The uptick in gross rental yields can be attributed to significant increases in median advertised weekly rents over the past two years.

Since March 2022, median rents have risen from $460 per week to $600 per week following consecutive annual increases of 20% and 9%, respectively.

This well outpaces the growth in home prices which has been around 4% over the same period and is a result of a steep decline in rental vacancy rates. Currently, only 1.1% of properties are available for rent in the market.

While the increase in gross rental yields is positive news for investors, it reflects the continuation of difficult conditions for renters who are still likely to face heightened levels of competition for available rentals.

We expect rents to rise at a slower rate than in the past few years, although it seems unlikely that they will decline or steady in the near future.

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