Mining hubs and NT capital outperform major cities in rental returns
Australia’s highest rental yields are being recorded outside metropolitan centres, with regional communities – particularly those linked to mining – and Darwin leading the nation, according to Domain’s September Quarter Rent Report.
The report, which draws on data from Domain’s Rental Estimates tool, highlights rental yield as a key metric for property investors. Rental yield reflects the annual income a property generates as a proportion of its value.
The findings indicate that regional locations are at the forefront, with most states’ strongest yields found in non-urban areas. This trend is attributed to persistent demand from mobile workforces and limited housing supply in mining regions.
Units are outperforming houses in every capital city in terms of rental yield. Their relative affordability and proximity to city amenities are driving this trend, though units generally experience slower capital growth.
Darwin is the top performer among capital cities, accounting for nine of the 10 highest-yielding suburbs nationwide. Median annual yields in Darwin range from 8.73% to 7.45%. The city’s constrained rental supply and fluctuating prices continue to attract investors focused on yield.
Suburbs in Melbourne, with yields between 7.65% and 6.67%, Perth (7.05% to 6.69%), and Western Sydney (6.58% to 6.05%) also feature prominently, indicating that robust rental returns are not limited to one region.
“The data shows that Australia's strongest rental yields come down to two key factors, affordability and consistent rental demand,” said Nicola Powell (pictured right), chief of research and economics at Domain. “In regional areas, that demand often ties back to major industries like mining, where investors look for higher rental returns to offset the extra risk and slower capital growth that can come with these markets.
“Darwin really stands out as a landlord’s market. Its ongoing supply-demand imbalance, driven by a transient workforce and relative affordability compared to the east coast, is keeping rents high and cementing its reputation as Australia’s high-yield capital.
“Melbourne’s also one to watch. While it hasn’t led in terms of capital growth recently, its strong yields and renewed investor interest suggest the market could be regaining momentum.”
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