A new report from Hotspotting revealed the top locations in Australia right now where investors can enjoy the “holy grail” of rising rents and property prices, as rental yields go beyond 6.5%.

The quarterly Hotspotting Pulse Report, exclusively provided to Your Investment Property, identified several locations in Queensland, South Australia, Western Australia, and Northern Territory where investors can take advantage of strong market fundamentals, including rising rental yields, robust growth outlook, and tight vacancy rates.

Hotspotting director Terry Ryder said rental yields are continuing to rise even in markets where prices are increasing, which only indicates that rents are climbing faster.

“Even though the RBA has stopped lifting interest rates, the rate rises we’ve seen since May last year have made it much harder for investors to afford all the costs of ownership,” he said.

“The solution is to buy in areas where rental yields are well above average – where gross yields are typically five per cent to six per cent or, in some cases, seven per cent and higher.”

Hotspotting general manager Tim Graham said if investors can attain strong yields in low-risk areas facing price growth, they are poised to secure sensible investments in the present economic landscape.

“One of the most noticeable features in this quarter’s Pulse is that in almost every one of the locations the median house price has risen in the past three months – but the median yield has also increased,” he said.

Mr Graham said the abundance of areas experiencing both rising yields and property values signifies a strong market environment for investors looking to enter or expand their property portfolios.

What makes each location stand out?

The report listed the strengths of each location, including the future infrastructure projects and development.

East Mackay – Mackay

  • Affordable homes
  • Low vacancies
  • Good rental yields
  • Strong population growth
  • $500 million Mackay Ring Road
  • $16 billion Bravus Coal Mine
  • $3 billion Clarke Creek Wind Farm
  • New Hospital, Sarina
  • Mackay Waterfront Priority Project
  • Hydrogen Export Facility

Mr Ryder said the Mackay property market is receiving support from advancements in the local economy, which is diversified across several sectors such as agriculture, horticulture, aquaculture, mining, manufacturing, construction, and tourism.

“It is also proving to be a drawcard for first-home buyers and, with easy access to the Whitsunday islands, it is luring residents from larger more expensive cities, a trend that has escalated since the start of the pandemic,” he said.

Overall, there are 584 infrastructure projects worth an estimated $43bn in the pipeline for the broader Mackay-Whitsundays region.

“Spending on major infrastructure is set to provide further impetus to property markets in the area,” Mr Ryder said.

Kirwan – Townsville

  • Strong population growth
  • Strong, diverse economy: military, government admin, tourism, education,
  • export port, manufacturing, resources
  • HQ for Adani Mine project
  • $2.5 billion CopperString 2.0 project
  • $1.4 billion Port redevelopment
  • $1.9 billion expansion of James Cook University

Mr. Graham pointed out that the Townsville market experienced a recovery in 2020 and witnessed robust growth throughout 2021. This was attributed to the diverse nature of the local economy and the significant investment in infrastructure projects.

“There was exceptional price growth in many suburbs in 2021 and 2022,” he said.

“Numerous large projects supported by public and private investment of around $11bn are either under way or in the pipeline, which include projects in defence, transport, tourism, energy, and education.”

Bundaberg North – Bundaberg

  • Affordable homes and high yields
  • Diverse economy based around agriculture, tourism, health, education,
  • manufacturing, and construction
  • $2 billion South Beach community
  • $1.2 billion new hospital
  • $950 million renewable energy projects
  • $20 million Port of Bundaberg expansion

For Mr Ryder, Bundaberg offers a quality lifestyle and strong business connectivity, given its location at the southern end of the Great Barrier Reef and its connectivity by road, rail, and air to Brisbane and other major Queensland cities.

“It is the major commercial and service centre for the Wide Bay–Burnett region and is poised for future growth as plans for several big-ticket projects progress,” he said.

“The State Government identified the city as a State Development Area in 2017 and 5,000ha of land around the Port of Bundaberg is now earmarked for a major redevelopment.”

“The Bundaberg region is one of Queensland’s leading agricultural areas and has a number of major businesses, including Bundaberg Brewed Drinks that makes the iconic brand of rum.”

Berserker – Rockhampton

  • $39 billion in renewable energy projects
  • Affordable housing
  • $1 billion being spent on road infrastructure projects
  • $2.5 billion Shoalwater Bay Military Training Centre redevelopment
  • Revitalised CBD
  • $495 million Lower Fitzroy River weir

Mr Graham said Berserker has remained largely resilient to the pandemic's impacts and has, in fact, benefited from the increased preference for more affordable lifestyles, a trend accentuated by the lockdown phases prompted by the pandemic.

“Rockhampton has been a magnet for southern migrants, first-home buyers, and investors — its diverse economy is being boosted by the resources sector with construction of the Bravus – formerly Adani – coal mine well under way,” he said.

Port Augusta - Port Augusta

  • Multiple renewable energy projects totalling several billion dollars
  • $975 million copper/gold project
  • Role in $4 billion economic corridor
  • Strategic location at “the crossroads of Australia”
  • Benefits from Woomera area mining
  • Major residential projects

Mr Ryder said the Port Augusta property market has experienced notable progress over the last year, attributed to improvements in the South Australian economy, an increase in business confidence, a resurgence in the resources sector, and advancements in alternative energy projects.

“Several major developments worth billions of dollars are occurring in the Port Augusta region,” he said.

Geraldton – Geraldton

  • WA’s second largest port
  • Largest city north of Perth
  • Australia’s windsurfing capital
  • Major mining centre
  • High-speed train to Perth proposed
  • Commercial activity hub
  • Affordability and rising sales activity
  • Very low vacancies

Geraldton is a key regional centre which, according to Mr Graham, has undergone rapid growth in recent years, in line with the growth in Perth and the state overall.

“With an increasing population and growing economy, there has been a notable increase in the LGA’s property market while prices remain at levels only a fraction of those elsewhere across the nation,” he said.

“As the Perth property market rebounded strongly since 2020 so, too, did the municipality of Geraldton, four hours’ north of the capital city.”

Orelia – Kwinana

  • Highly affordable housing
  • 10,000 jobs in 30 years
  • 2nd fastest growing LGA in the State
  • Large industrial areas and job nodes
  • Australia’s first battery-grade lithium hydroxide battery plant

Mr Ryder said Kwinana is the second fastest growing LGA in Western Australia and is also the most affordable precinct.

“The City of Kwinana also has good infrastructure, including schools, shopping, train links to central Perth and extensive green spaces,” he said.

Armadale – Armadale

  • Affordable housing
  • Strong population growth
  • Large industrial areas (jobs nodes)
  • Strategic Metropolitan
  • Activity Centre
  • $4 billion container port
  • $1 billion hydrogen plant
  • $635 million rail line and station
  • $237 million upgrade to Armadale Rd

Armadale is the top location for young families, given its property market’s affordability and its good infrastructure, services, and amenities.

“Armadale is the fourth fastest-growing LGA in Western Australia and it has the added advantage of being strategically located in Perth’s south-east transport corridor, which makes numerous large-scale employment nodes easily accessible,” Mr Ryder said.

“Further growth and opportunities are expected in the future, with the City of Armadale marked for infrastructure development by the Federal Government.”

Withers – Bunbury

  • Strong population growth
  • Attractive seaside lifestyle
  • Affordable housing
  • Large industrial areas with job nodes
  • $278 million Bunbury Hospital project
  • $1.25 million Bunbury Outer Ring Rd
  • $800 million Greenbushes Lithium mine expansion

Withers is located within Bunbury, which is the commercial heart of Western Australia’s booming south-west region and has one of Australia’s biggest regional ports.

Mr Ryder said Bunbury offers an attractive seaside lifestyle and affordable housing.

“The other encouraging features of Greater Bunbury’s property market are its low vacancy rates and high rental yields,” he said.

“Several government planning instruments indicate the region will be the focus of extensive transport and infrastructure spending in the near future.”

Moulden – Palmerston

  • $4.7 billion Barossa gas project
  • $2.3 billion in Defence projects
  • $2.1 billion Project Sea Dragon
  • $30 billion Australia-ASEAN PowerLink Project
  • $1 billion new suburb – Northcrest
  • $510 million Larrakeyah Barracks
  • $515 million Darwin ship lift project
  • $250 million Charles Darwin University expansion

Mr Graham said Moulden, positioned approximately 20 kilometers away from the Darwin Central Business District, is reaping the benefits of Darwin's vibrant property market, even in the face of a more widespread growth deceleration experienced across the nation in 2022.

“Strong growth was initially sparked by an influx of residents keen to enjoy a tropical lifestyle,” he said.

“There is potential for ongoing growth if some of the major infrastructure projects in planning proceed to development, which represents a major recovery following a prolonged downturn.”

Photo by pamspix on Canva.