Where are Australia’s newest investment hotspots?

Looking for the latest Australian investment hotspot? The latest Domain Rental Report reveals how much rents and yields have risen in the last year, so you’ll be spoilt for choice.

If you’re choosing between capital cities on rental yields, the way forward is clear. Sydney has seen the biggest jump over the past 12 months in both unit and house gross rental yields on the Domain figures, increasing by an astonishing 29.5 per cent and 13.2 per cent, respectively.

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“Unit rents reached a record high after the steepest quarterly and annual increase ever recorded in the city,” reports Domain’s chief of research and economics, Dr Nicola Powell. “For houses, gross rental yields are at their highest point since December 2020 in Sydney, following the fastest annual surge on record.”

Melbourne is coming in second, with unit yields at 23.6 per cent, and houses at 14.4 per cent, while Perth is in third place for units at 10 per cent and Brisbane third for houses at 12.9 per cent.

For units, Brisbane has a yield of 9.7 per cent, Darwin is at 8.4 per cent, and Hobart is only slightly behind at 8.3 per cent. For houses, Hobart is in fourth place at 10.7 per cent, and Darwin fifth at 6.8 per cent.

But look more closely at suburbs in this landlords’ market, and it’s even more of a mixed bag. The hottest hotspot nationally is Bass Hill in Sydney’s Canterbury-Bankstown region, with an annual rise in weekly unit rents over the past year of a whopping 62.8 per cent.

“It’s been a drastic leap!” says agent Carlos Tamayo of Agents’ Agency Network Partners, who has a two-bed unit for sale at $565,000, leased out at $580 a week.

“The problem is, we don’t have enough units available in Bass Hill, or in nearby Bankstown and Yagoona, and yet demand is high as the ones we do have are close to shops and the train station, and prospective tenants have been offering more rent than we’re charging.”

Rents have gone up by 56.2 per cent over the year for units in Brisbane West and Flinders View, and by 40 per cent in nearby Collingwood Park.

Local agent Scott Reeves of Elders Real Estate says it’s just an excellent investment area. “There are reasonable prices here and the way rents are going up … It’s now one of our most popular areas,” he says.

“There’s a lot going for it in terms of shopping centres and routes into the Brisbane CBD and attractions.”

In Melbourne, units are at their most attractive in the inner urban part of the city, with a rent rise of 46.7 per cent.

A lot of that is a result of investors leaving the market over the past four or so years, believes Stephanie Evans of Belle Property Albert Park, because of the hike in interest rates and rising maintenance costs.

“This has reduced the stock available to rent, and with so many people wanting to live near the city centre, rents have gone crazy as a result,” she says.

“We’re hoping that increase in rent will now be the motivation for investors to start buying again, and we’re seeing the start of that.”