New data shows concentration of investment hotspots outside major capitals
Queensland and Western Australia have emerged as the leading states for property investment, according to a recent analysis by property data provider PropTrack.
The report, which assessed suburbs across Australia on rental yield, annual value growth, and average time to lease, found that these two states accounted for the majority of the 200 top-performing locations.
Queensland featured 98 suburbs on the list, while Western Australia followed with 72. South Australia came in third with 17 suburbs, ahead of New South Wales (7), the Northern Territory (4), and Victoria (2).
Spalding in Western Australia ranked first, with a median house price of $398,000, a rental yield of 7%, and a 38% increase in value over the past year. Properties in Spalding were typically leased within 22 days. Rockhampton City in Queensland took second place, recording a 35% rise in median house price to $375,000, an average leasing period of 18 days, and a gross yield of 6%.
Angus Moore (pictured right), senior economist at REA Group, observed that regional and outer suburban areas were prominent in the findings. “It’s not universal, but it is a theme,” said Angus Moore, senior economist at REA Group.
“One, regional areas often carry higher rental yields. And two, those areas have also seen stronger price growth over the past 12 months, but you could even extend that back to the past five years.
“Those sort of more affordable, more outlying areas have seen really strong growth on average since 2020, and that’s why they’re showing up in these sorts of lists.”
Moore also noted that these locations often have thinner rental markets. “There’s just not as much supply and availability as the inner city, where you have a deeper rental market that historically can carry some risk of properties sitting vacant, and so you see higher yields to compensate,” he said.
“That hasn’t been true in recent years, where regional rental markets have seen extremely tight conditions. We’ve also seen very strong demand for regional and outer suburban homes, both to rent and to buy, and that’s driven up rents a lot in those areas.”
Moore attributed Queensland and Western Australia’s strong representation to recent market trends. “Regional Queensland is still solid, even if growth is slower this year and they’re also extremely tight rental markets,” he said. “These areas have seen extraordinarily low rental vacancy rates and commensurately very strong growth in rents over that period. So that continues to make them attractive to investors.”
He added that interstate migration had played a role, with many families moving from New South Wales and Victoria to Queensland. “There’s not a lot of opportunity in NSW and Victoria compared to the other states on this list,” Moore said. “That’s not to say there aren’t good opportunities for investors in those states, but certainly relative to those smaller states and smaller capitals, Sydney and Melbourne just haven’t performed as well.”
The report is based solely on data, and Moore cautioned that investors should conduct further research before making decisions. Some suburbs on the list, such as Rochester in Victoria and Lismore in New South Wales, have experienced significant natural disasters.
“One other caveat is the regions of WA and Queensland that are mining areas,” Moore said. “These can be quite volatile markets, because they do depend on conditions in the mining sector, and that has historically seen some volatility.
“Investors do need to go and dig in and understand the area and what’s been driving that, to figure out whether it’s going to continue, because locally specific factors are going to be very important, such as new builds, whether people are moving to the area from other states, big construction projects, changes in local labour markets and employers.”
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