Investors are reaping the rewards of improving rental returns amid the tightening rental market and falling property values, a new report showed.
RP Data found that after stagnating for more than a year, yields are finally rising to a level that makes property investing an attractive option.
The report showed that there are now around 180 suburbs throughout mainland Australia achieving a gross rental yield of at least 6%. Just over one third of these suburbs are within the capital city metro areas and the remainder are located in regional townships, particularly resource intensive and coastal lifestyle locations.
Tim Lawless, national research director with RP Data said that the uptrend has been boosted by softening capital growth, together with an exceptionally tight rental market across the board.
Adelaide, Brisbane and Melbourne are the only capital cities that have not shown an improvement in gross rental yields between March 2007 and March 2008 due to the fact that these markets are still showing above average rates of dwelling value growth.
In Sydney, Ultimo and The Rocks area are two markets achieving quality rental returns.
Lawless added that the best metro rental yields can be found in the outer suburbs along transport corridors where housing prices are low relative to the rental market.