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A strong rental yield is crucial in building a portfolio, but you don't want it to come with the expense of no capital growth. In this episode, we're going to talk about the eight locations around Australia with the strongest rental yield that still has increasing growth potential to help you understand how you can potentially balance cash flow and capital growth when building your portfolio. I'm Junge Ma, lead research analyst at InvestorKit. Now let's get into it. So the way we put this list together is by selecting the highest yielding area with growth potential in every state of the country.
Let's get into region number one, Geraldton in Western Australia. The current median price is $460,000. With that low price point, it's no doubt that the rental yield is still good. The current rental yield there is 6. 2%, but it has been decreasing over the past year because while both sales price and rental price were both increasing fast, the sales price performed even better.
In the past year, sales price there increased by 23%, and at the same time, rental prices increased by 12%. So as a result, yield has been decreasing. However, even with the decrease, 6. 2% is still a very ideal rental yield. And now let's have a look at the growth potential.
Market pressure in Geraldton is still high. Inventory now is just at 1. 6 months of stock. In the past year, it actually has decreased by almost 50%. If we look at the trend lines, there's no significant sign of an increase yet.
And then if we look at another indicator of market pressure, days on market, it's still very strong. The current days on market is 32 days, and it is 47. 5% lower than it was a year ago. And then on the rental market, vacancy rate is just 0. 3%.
That is extremely low. And in the past one year, it also has decreased by close to 25%. Next region on the list, Mildura in Victoria. The current median price is $455,500, and the rental yield there is 5. 5%, much higher than its capital city, Melbourne's.
In the past year, sales prices have increased by 8. 5%, while rental prices have increased faster by 14. 5%. So as a result, the rental yield is actually increasing over time. But how about the market pressure?
Inventory now is about 2. 5 months of stock. Not as low as Geraldton, but it's still at a very healthy level. And in fact, it's been declining over the past half a year. Now sitting at 24% lower than a year ago.
Days on market, 28 days, just slightly higher than a year ago. The rental market is also under high pressure with a vacancy rate of 0. 6%. Now the third region is Murray Bridge in South Australia. It's a town very close to Adelaide with a very affordable median price, which is just $438,500.
Rental yield there is 5. 4%. In the past year, sales prices have grown by close to 25%. At the same time, rental prices also increased by 13%. As you can tell, sales prices have grown faster than rental prices.
So rental yield has actually decreased over the year. Again, just as Geraldton, 5. 4%. It is still a very healthy rental yield, especially if you compare to Adelaide's around 4% yield. Now market pressure.
Inventory there is now also around 2. 5 months of stock. It is 20% lower than a year ago. Days on market is high, I will say. And it's actually a bit higher than a year ago.
The rental market, again, is under high pressure with extremely low vacancy rate of 0. 3%. Up next, Double in New South Wales. Median price there is $520,000, one of the most affordable towns in New South Wales. And rental yield is now around 5%.
In the past year, sales prices and rental prices have grown similarly. Sales price growth 6. 1%, while rental growth 6. 5%. And as a result, yield has been quite stable over a year.
And then how about market pressure? Inventory now is around 3 months of stock. It's been declining over the past few months. That's a good sign of market pressure improvement. However, this improvement is not yet reflected in days on market.
Days on market now is 47 days. It's actually 12% higher than a year ago. But we do see the increase has stopped in recent months. It's just yet to come down. And in the rental market, we do see a high pressure as well with vacancy rate being 0.
7%. Then the fifth location on the list is Launceston in Tasmania. Median house price there is $557,000 and rental yield being 4. 7%. It is not the highest across the country, but one of the highest within the state of Tasmania.
Over the past year, sales price didn't grow too much just by 1. 3%. But at least it has come out from the decline after COVID boom. And the rental growth was 2. 1% over the past year, slightly higher than the sales price.
As a result, yield has been increasing over the past year. Now market pressure. Sales market pressure is not extremely high now. As we can see, it is still in a recovery phase. Inventory now is 3.
4 months of stock, around 15% lower than a year ago. Days on market is 35 days and it's also lower by 8% compared to last year. Then again, rental market is under relatively high pressure. Vacancy rate is now 0. 6% and that is 30% lower compared to the same time last year.
Then the next region on our list is Tagranon in ACT or Canberra. Just as Launceston, this is not the highest yielding region across the country, but it's the highest in the ACT region. Median price there is $860,000. Yield now is 4. 1%.
Its growth has been very close to Tasmania's. Sale prices increased by 1. 2% or rental prices increased by 3. 2%. And as a result, yield has been slightly increasing over the past year.
Now sales market pressure is not the highest. While inventory is at a low level, just 1. 5 months of stock. Then how about market pressure? Market pressure in Tagranon is gradually recovering.
We can see that in the gradually declining days on market. Days on market now is 32 days and it's 11% lower than the same time last year. And at the same time, inventory has been low forever. Now it's 1. 49 months of stock, around 1.
- It's been increasing just slightly last year, around 1% higher than the same time last year. We can definitely say that's quite stable. Rental market again under high pressure with a vacancy rate at 0. 7%.
Then the second last region we are looking at is Townsville in Northern Queensland. Current median price there is $538,000. Rental yield at 5. 4%. And this has been declining over the past two years.
In the past year, sales prices have increased by 26. 5%. And at the same time, rental prices only increased by 9. 5%. Not bad, but not as fast as sales price growth.
So as a result, in the past year, rental yield has actually decreased by 10%. Then how about the market pressures? In the sales market, pressure is still high. Inventory is extremely low at 1. 15 months of stock, 34% lower than the same time last year.
And we are not seeing significant signs of increasing. At the same time, days on market is at an extremely low 12 days, 40% lower than the same time last year. And then the rental market is also quite tight. Vacancy rate is at 0. 8%.
It's slightly higher than the same time last year, but it is under 1%, well below the balance level. And then the last region on our list is with the highest yields among all eight regions we've selected. And it is Palmerston in the Northern Territory. The current median price there is $535,000. Rental yield is at 6.
5%. Over the past year, sales prices increased by around 3%. And at the same time, rental prices have increased by 4. 8%. That has led to a slight increase in the rental yield.
And now the market pressure in Palmerston is increasing. We can see that in both inventory and days on market. Inventory level in Palmerston is now at just 0. 9 months of stock. And that is 70% lower than the same time last year.
Days on market is still high at 85 days, but it has been declining. Now 12% lower than last year. As the market heats up, we will probably see days on market declining further and further. The rental market is also tight. 0.
6% vacancy rate. And that is 37% lower than the same time last year. So that's the list of eight areas. In some of them, you can see really high yields. Some of them just have an averagely high yield.
So depending on which state you're looking to invest in, these areas are the markets with the highest yields as well as the strongest growth potential. There's something I want to point out about this list. Did you notice the vacancy rates? Literally none of them are above 1%. And apart from one, all of the inventories are below three months.
The reason I'm pointing this out is because you can go to realestate. com right now and probably find a higher yielding area. But like I said at the start of this episode, a strong yield is crucial when you build your portfolio, but not at the expense of capital growth. I hope you enjoyed this list.
