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Regional markets show higher rental yields than cities: MCG Quantity Surveyors

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QLD

New data from MCG Quantity Surveyors reveals that regional property markets are offering higher rental yields compared to metropolitan areas, potentially attracting investors seeking inflation-beating returns.

Mike Mortlock, Managing Director of MCG Quantity Surveyors, said: “Regional areas are exhibiting higher rental yields than metropolitan areas.”

“For instance, West Pilbara in Western Australia has house yields of 9.85% and unit yields of 13.12%, driven by strong rental demand in the mining sector,” Mortlock added.

The analysis, released on July 23, 2024, highlights several standout regional markets:

Victoria’s Campaspe region reported house yields of 6.23% and unit yields of 11.28%, influenced by affordable property prices and consistent rental demand.

In Queensland, the Outback – South and Bowen Basin – North regions showed high house yields at 9.07% and 8.88% respectively, with unit yields reaching 9.63%.

However, Mortlock cautioned investors to consider the risks associated with regional investments, particularly in terms of capital growth potential.

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“It’s important to balance the attraction of high yields with the potential for capital growth,” he said. “Investors should carefully consider the overall risk profile and their long-term investment strategy.”

The study also found that yields in metropolitan areas tend to increase with distance from the CBD. For example, Brisbane’s house yields increase from 2.81% (0-10km from CBD) to 4.13% (20-30km), while unit yields rise from 4.92% to 5.55% over the same distances.

Perth exhibited a similar trend, with house yields rising from 3.38% to 4.70% and unit yields from 5.55% to 6.34% as distance from the CBD increased.

“Investors may find higher returns in suburbs further from the city centre,” Mortlock noted. “However, regional areas are currently exhibiting higher yields, particularly in resource-rich regions.”

The findings underscore the importance of a diversified investment strategy that considers both regional and metropolitan markets, according to MCG Quantity Surveyors.

While regional markets are showing strong rental yields, investors are advised to weigh these returns against potential volatility and long-term capital growth prospects compared to metropolitan areas.

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