'High rents, lower property value': where investors are eyeing in regional Australia
Finding the right location can really pay off.
Investors circling the market waiting for an opportunity to pounce will be buoyed by the latest property data highlights, which shows that regional markets are showing some resilience to the broader market slowdown.
Values have risen 1.1 per cent over the month and 3.3 per cent over the quarter, compared with 0.6 per cent month on month and 1.8 per cent quarter on quarter rises across the combined capital cities.
The monthly trend in national rental growth has held around 0.7 per cent over the past three months, taking the quarterly change to 2.1 per cent, the largest three month change in rents since May 2024.
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By continuing you agree to our Terms and Privacy Policy.On an annual basis, the national rental index is up 5.7 per cent, the largest annual change since October 2024, adding about $37 a week to the median rental rate.
Gerard Burg, head of research for Cotality says with housing values and rents rising at a similar pace, gross yields are holding reasonably firm, albeit at a low level.
Nationally, rental homes are returning a gross yield of 3.57 per cent, down from 3.69 per cent a year ago.
Region by region
The East and West region of the Pilbara in Western Australia offer investors high yields.
"The reason you see such high yields in those areas is that fly -in, fly-out (FIFO) workers don't want to purchase a property in that area, so you get these very high rents from comparatively lower value properties," Mr Burg said.
More remote locations are cheaper to purchase, such as Bourke in NSW, Broken Hill, the far west of NSW, the Kimberley and Katherine regions, Western Australia and the Northern Territory.
"In the South Australian region around Broken Hill, the median value of a dwelling sits at about $220,000, so compared to Sydney where properties are sitting at $1.3 million, it's a very low cost purchase," Mr Burg said.
In Victoria, properties in the Campaspe area are comparatively cheaper, along with Echuca on the Murray, where value is sitting at $490,000.
People are moving out of the cities into regional areas in response to the rising cost of city life, and regions such as the Murray River where the vacancy rate is sitting at 6 per cent, making it a very tight rental market that's supported by the strong growth of rents in that area.
In Central Highlands of Queensland, ($360,000 purchase price for a 6 per cent yield) and Darling Downs area ($400,000 for 5.9 per cent yield) make these affordable areas to purchase an investment property, Mr Burg said.
Where people are moving
People are migrating into regional areas in search of more affordable way of life, bolstering the rental yields, Mr Burg said.
"A lot of these regional areas are very difficult to build in right now because construction costs are very high, so a lot of these locations compared to capital areas are difficult to transport goods to. Accessing construction labour adds to the overall short supply issues. This could mean quite a bit of growth in terms of value and rents over time."
But experts say investors should look before they leap. Damien Mifsud, head of lending at Ironbark Advice warns that while regional rental yields can look compelling on paper, cashed-up older investors should always look past the headline number.
"Rising insurance premiums, higher council rates and property management costs mean the gap between gross and net yield in regional areas can be two to three percentage points - so modelling true holding costs is essential," Mr Mifsud said.
"The good news is that investors who don't need to heavily gear have a genuine advantage in this market, with back-to-back rate hikes thinning out leveraged competition.
"But not all regional yield is created equal - the areas delivering sustainable returns tend to have diversified local economies built on health, education, and infrastructure, not single-industry reliance. With household budgets under pressure from surging fuel and living costs, tenant quality and local economic resilience matter just as much as the yield itself.
"For anyone in or near retirement, getting the ownership structure right from day one - whether that's personal name, trust, or a self-managed super fund - can make a material difference to the long-term outcome," he said.
Originally published as 'High rents, lower property value': where investors are eyeing in regional Australia
