Real estate agents are reporting greater interest by investors, including self-managed superannuation funds, in homes in regional Victoria. So new data showing that rental vacancy rates across the state are stable or falling, and that regional markets are offering healthy yields of up to 5.4 per cent, will be welcome news.
The vacancy rate data showed that in Geelong, the regional centre with the highest rate, there was a 0.1 per cent fall to 4.4 per cent in October, based on the six-month average trend to October 31. In East Gippsland and Wellington Shire, there was a fall from 3.4 to 3.1 per cent.
In many regional centres such as Ballarat, the vacancy rate was already low with housing agencies often struggling to find sufficient accommodation for tenants. So while a further fall in the vacancy rate is unwelcome news for those looking for a place to live, for investors it means continuity of tenancy and the likelihood of a pool of would-be tenants from which to choose.
In Ballarat and the Central Highlands the vacancy rate fell from 2.8 to 2.7 per cent, while in Shepparton and Goulburn, Warrnambool and the Western District, it was down to 2.7 per cent from 2.9 per cent. In the Wimmera it was stable at 2.2 per cent.
Median house rents were up in Geelong, Ballarat and Bendigo in October, while across the state the median rent for a house remained stable at $300 a week. The median apartment rental was also stable at $250 a week but in Ballarat, where the housing market is tight, it rose from $240 to $255 a week.
Although property investment in regional Victoria can offer healthy returns, local factors such as employment opportunities play a role and this varies across the state.
When looking at rental yields – that is, the proportion of rental income derived from the asset – those with the highest grossing returns in the 12 months ending September 30 were recorded by three-bedroom houses in Sale and Ballarat East at 5.4 per cent. The yield for a three-bedroom house in Echuca was 5.3 percent, and three-bedroom homes in Drouin and Alfredton returned gross rental yields of 5 per cent.
The top areas for rental growth for the 12 months ending September 30 were Wendouree, Mildura, Echuca, Alfredton, Corio and Kyneton – all for three-bedroom homes. Across the state, one-bedroom units returned the highest gross rental yield with 5.5 per cent, while the return for two-bedroom units was 5.3 per cent and three-bedroom units returned 5.2 per cent. This compared with 5.1 per cent for two-bedroom houses and 5 per cent for three-bedroom houses.