Investment hotspots: best rental yield in Perth
1 February 2024"If you’re considering investing, REIWA Research has compiled the top 10 suburbs for both houses and units with the best rental yield for 2023. "
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Perth’s property market is performing very well at the moment and offers good opportunities for investors.
If you’re considering investing, REIWA Research has compiled the top 10 suburbs for both houses and units with the best rental yield for 2023.
As you can see, a high rent or purchase price aren’t necessary to achieve a high yield. The Top 10 suburbs for houses have median sale prices below $500,000 (the Perth median was $590,000 at the end of December), while the Top 10 suburbs for units have median sale prices below $355,000 (compared to the Perth median of $408,000). The median weekly rents for houses and units in the top 10 lists are all below the respective Perth medians of $620 and $570.
Interestingly units outperformed houses when it came to yield, with the top 10 suburbs all recording yields above 7.4 per cent and as high as 9.0 per cent, outshining the top performing suburb for houses at 6.4 per cent.
This may reflect the lower sale price growth of the unit market compared to houses in a rising rent environment.
Top 10 suburbs for rental yield (houses)
| SUBURB | 2022-23 MEDIAN WEEKLY HOUSE RENT | ANNUAL MEDIAN HOUSE SALES PRICE | RENTAL YIELD | |
| 1 | Medina | $440 | $360,000 | 6.4% |
| 2 | Brookdale | $500 | $415,000 | 6.3% |
| 3 | Langford | $535 | $445,000 | 6.3% |
| 4 | Armadale | $450 | $380,000 | 6.2% |
| 5 | Cannington | $530 | $450,000 | 6.1% |
| 6 | Queens Park | $580 | $495,500 | 6.1% |
| 7 | Balga | $500 | $427,000 | 6.1% |
| 8 | Mandurah | $450 | $385,000 | 6.1% |
| 9 | Maddington | $500 | $430,000 | 6.0% |
| 10 | Greenfields | $500 | $430,000 | 6.0% |
Top 10 suburbs for rental yield (units)
| SUBURB | 2022-23 MEDIAN WEEKLY UNIT RENT | ANNUAL MEDIAN UNIT SALE PRICE | RENTAL YIELD | |
| 1 | Orelia | $360 | $208,000 | 9.0% |
| 2 | Bayswater | $470 | $280,000 | 8.7% |
| 3 | Glendalough | $450 | $291,000 | 8.0% |
| 4 | Balga | $500 | $327,000 | 8.0% |
| 5 | Hamilton Hill | $510 | $340,000 | 7.8% |
| 6 | Gosnells | $420 | $284,000 | 7.7% |
| 7 | Wembley | $450 | $311,000 | 7.5% |
| 8 | Armadale | $430 | $300,000 | 7.5% |
| 9 | Midland | $450 | $315,000 | 7.4% |
| 10 | Cannington | $505 | $355,000 | 7.4% |
The top suburbs for rental yield for houses and units (median annual rent / median annual sale price)
Filtered for suburbs with 28 or more sales and 20 or more leases in 2023.
For a deep dive into these and other suburbs, visit reiwa.com and use our new suburb comparison tool, or speak to a local REIWA agent.
What is rental yield?
Rental yield is the difference between the costs of an investment property and the income from renting it out. It gives you an idea of the return you can expect from your investment.
It is calculated in two ways:
Gross rental yield measures the total rent for the year as a percentage of the value of the property. For example, if your property rents for $450 per week your annual rent is $23,400. If your property is valued at $500,000 the gross rental yield is 4.68 per cent ($23,400 / $500,000 x 100).
Net rental yield measures the annual rental income, less the fees and expenses of owning the property, as a percentage of the property’s value.
Using the same example as above, with expenses of $5,000, there is a net rental yield of 3.68 per cent (($23,400 - $5,000 = $18,400)/ $500,000 x 100)).
Expenses may include repairs and maintenance, strata fees, council rates, property management and advertising fees, insurance and depreciation.
Interest on your investment loan is not calculated as part of the net rental yield. It relates to your own financial situation and isn’t directly related to the costs of the property.
Why would you want a higher rental yield?
Typically, properties with high yields generate steadier cash flow, which may be important for your investment strategy if you are looking for regular additional income. You may be looking for the yield to be higher than other ways of investing your money such as a term deposit account or a share portfolio.
However, yield is only one thing to consider. For example, many investors purchase in areas with high median prices and low rental yields. Rental yield may not be part of their investment strategy. They may be aiming for high capital growth over the longer-term or looking to negatively gear their investment, instead of seeking a steady income stream.
Remember the market does fluctuate and to paraphrase the superannuation adverts: past performance is not a guarantee of future performance. Before investing make sure you do your research, determine which investment strategy is right for you and speak to your financial advisor or accountant. And make sure you review your investment regularly as market conditions and your own circumstances change and adjust your strategy if necessary.
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