6 Australian suburbs with the best rental yields

Hotspotting director Terry Ryder said that property investors are increasingly targeting areas combining strong rental yields with strong growth potential.

“All of these locations have been selected based on a combination of affordability, strong local economies, infrastructure development, and increasing employment prospects,” Ryder said.

Here are the top areas nationwide with high yields for both houses and units:

Cairns City – Queensland

(Units)

Median unit price: $470,000

Annual growth: -10 per cent

Rental yield: 7.7 per cent

Vacancy rate: 0.7 per cent

On the coast of Far North Queensland, Ryder said that the Cairns property sector has continued to demonstrate resilience through affordability and record-low vacancies.

“As the city’s economy gains momentum, the city’s increasingly diverse industrial base is a key factor behind its strong growth trajectory,” Ryder said.

“The city is now a hub for sectors such as healthcare, agriculture, education, defence, construction, mining, and information technology,” he added.

Ryder said that the construction and resources sector has emerged as a major economic force in Cairns, and fuelled “thousands of new jobs in recent years”.

Through the growth, the Cairns local government area (LGA) notched up an unemployment rate of just 2.9 per cent in the December quarter, which was significantly below Queensland’s statewide rate of 4 per cent.

“With increasing demand, strong economic fundamentals, and ongoing development, Cairns is well-positioned for continued property market growth,” Ryder said.

Churchill – Victoria

(Houses)

Median house price: $370,000

Annual growth: 6 per cent

Rental yield: 6.5 per cent

Vacancy rate: 1.5 per cent

In Eastern Victoria, Hotspotting’s general manager, Tim Graham, said that Churchill in the broader Latrobe Valley has surged as a prime destination due to increasing demand for affordable lifestyle properties.

“Located just two hours south-east of Melbourne, the region is attracting buyers seeking value, lifestyle and investment potential,” Graham said.

“Investors are taking advantage of the region’s low vacancy rates and long-term economic potential,” he added.

Graham noted that the high sales volumes in Churchill reflected strong buyer interest, which has been driven by the area’s competitive property prices, solid rental yields, and draw of country living.

“For those looking to relocate to Victoria’s picturesque south-east, Latrobe Valley presents an outstanding opportunity with house prices below $400,000,” he said.

Cloverdale – Western Australia

(Units)

Median unit price: $490,000

Annual growth: 25 per cent

Rental yield: 7.3 per cent

Vacancy rate: 2.5 per cent

Looking at the Western Australian market, Ryder highlighted that Cloverdale in the Belmont LGA is rapidly becoming one of the state’s most attractive investment and residential markets, due to its prime location near the Perth CBD and ongoing expansion of Perth Airport.

Ryder said that infrastructure remains a driving force behind Belmont’s transformation, with major road and rail projects helping to boost employment and enhancing accessibility.

“The local unemployment rate also dropped to 4.3 per cent in December 2024, down from 5.2 per cent the previous year,” he said.

Despite Belmont’s proximity to Perth’s city centre, Ryder said that the market has remained “surprisingly affordable” and attracted attention from both investors and owner-occupiers.

“As demand for well-located property grows, Belmont’s strong economic foundations and strategic development position it as a standout choice in the Perth market,” Ryder said.

Darwin City – Northern Territory

(Units)

Median unit price: $395,000

Annual growth: -5 per cent

Retail yield: 7.5 per cent

Vacancy rate: 1 per cent

Up north in the top end, Graham said momentum is strong in Greater Darwin’s property market, with high affordability and exceptional rental yields lifting investor sentiment.

Graham explained that the major infrastructure projects underway in the NT led to a significant rise in transaction levels over the second half of 2024, which is expected to persist throughout 2025.

“As major infrastructure projects continue to reshape the Top End, transaction levels surged in the second half of 2024, with experts predicting sustained growth well into 2025,” Graham said.

Graham further noted that the investment prospects for the NT market has also been supported by the high levels of industry activity in the territory’s economy.

“Adding to Darwin’s appeal, the city’s unemployment rate fell to just 3.1 per cent in December 2024, reinforcing its economic strength and expanding jobs market,” he said.

Moree – NSW

(Houses)

Median house price: $282,000

Annual growth: -15 per cent

Rental yield: 8.3 per cent

Vacancy rate: 1.5 per cent

Along the banks of the Mehi River in northern NSW, Ryder said that the Moree Plains LGA is moving into a new phase of economic expansion that will position it as a key hub for businesses and investment.

As a result of Moree Plains’ designation as a “Special Activation Precinct” by the NSW state government, Ryder said that the region is set to become a centre for agribusiness, logistics, and food processing.

“This precinct status places Moree in a strong position to capitalise on new investment opportunities,” Ryder said.

Additionally, Ryder said that economic activity in Moore Plains will be amplified by its close proximity to key transport links in rural NSW.

“Moree has significant growth potential given its access to the Inland Rail Link and upgraded highways, which will enhance connectivity and drive economic activity,” he said.

Melbourne City – Victoria

(Units)

Median unit price: $440,000

Annual growth: -4 per cent

Rental yield: 7.7 per cent

Vacancy rate: 2.1 per cent

Graham said that demand for units in Melbourne has remained strong as a result of ongoing affordability challenges and changing buyer behaviour.

“Affordability challenges and evolving lifestyle preferences are driving a shift towards high-density living, with increasing numbers of investors and home owners favouring units over standalone houses,” Graham said.

Further evidencing the shift towards units in Melbourne, Graham highlighted that high-density dwellings currently account for 86 per cent of homes in the city, and added that this growth is expected to continue by 2025.

“Transaction levels are showing positive momentum across the city’s suburbs, reinforcing Melbourne’s position as a thriving property market amid sustained population growth and urban expansion,” he concluded.