Highest rental yields in New South Wales

Australia's most populous state boasts some of the most in-demand areas to live in on the planet. From the Northern Beaches to Sydney to the Blue Mountains, there's a vast array of property markets in NSW with inherent demand. For those looking at investment opportunities, and prioritising the passive income stream that can come from high rental yields, these are the suburbs where annual rent is high as a proportion of median property price.

See the full list of suburbs

Property investing in NSW

Rental yields are of course only part of the equation when it comes to property investing. The capital gains on a savvy property purchase can be hundreds of thousands, even millions, of dollars after holding for a couple of decades, so it can be short-sighted to pursue the greater near-term returns of a high rental yield property.

Property prices in Sydney have fluctuated over the past few years. After bottoming out at the start of 2023, the median price in Sydney rose steadily for much of last year. At the end of the year and the start of 2024, it looked to be plateauing, but has since regathered some steam, with the median dwelling price at an all time high as of June 2024. Since January '23, prices have risen nearly 16%.

There's plenty more to New South Wales than just Sydney though. With prices so high in the capital, more and more people are turning to alternatives like Newcastle and the Central Coast. Newcastle in particular is "thriving faster than most regional cities in Australia," according to local buyers agent Chad Dunn.

Through the year to June '24, the median dwelling price in NSW excluding Sydney rose 5.3%. While this growth is low compared to other regions, regional NSW might be another beneficiary of any potential interest rate cuts. It remains the state with the most expensive property: the median property price for regional NSW was more than $100,000 above regional Victoria, the next highest.

Suburbs to watch in Sydney in 2024

Suburbs to watch in Newcastle in 2024

Suburbs to watch in Central Coast in 2024

NSW Rental Yields

According to the most recent data available at the time of writing, these are the median rental yields for units and houses across NSW, divided between metro and country zones.

Source: CoreLogic. Data reported to the period ending November 2023. Median values account for sales transactions over three months.

Some of these numbers are noticeably lower than elsewhere in Australia. Houses in Metropolitan NSW have an average median rental yield of just 2.7%, the lowest of any state. The median house price in the major cities of NSW is $1,442,000, more than 50% above the next highest ($950,000 in the ACT and $892,000 in Victoria). While Metro NSW also has the highest rent ($730 compared to $680 in the ACT and $550 in the Northern Territory), the gap is less dramatic, which means lower rental yields. For city units, NSW has the same rental yield (4.4%) as metro Victoria.

It's a similar story outside of the likes of Sydney and Newcastle. Country NSW has the most expensive houses and units in the nation, with the lowest rental yields.

Read more: Highest rental yields in Australia

Top 25 suburbs for rental yield in NSW (houses)

Source: CoreLogic. Data reported to the period ending April 2024. Median values account for sales transactions over 12 months.

Three of the top five suburbs in NSW where rental yields on houses are the very highest are in Lismore in the Northern Rivers, south-west of Byron Bay. Lismore is known to be one of the areas of Australia most prone to flooding, with the community recently devastated by the floods of 2022. Residents of North Lismore, South Lismore and the CBD have had to evacuate because of flooding in the past. This risk, along with the huge cost of insuring a property in an area with such a high flood threat, has likely contributed to lower house prices compared to surrounding suburbs. At the same time though, the area remains a major urban area in NSW, so there is still plenty of demand for homes in these areas, even if it is as a renter. This could be one of the reasons why rent is so high relative to house prices.

Elsewhere, the list is dominated by inland centres for mining (like Broken Hill) and agriculture (like Wee Waa), where a more transient population can mean demand for temporary housing is greater than that for a permanent home. None of the top 25 suburbs are in major urban areas like Sydney or Newcastle. The closest is Lochinvar, Maitland, about 60kms north-west of the Newcastle CBD.

Top 25 suburbs for rental yield in NSW (Units)

Source: CoreLogic. Data reported to the period ending April 2024. Median values account for sales transactions over 12 months.

It's a similar story for units, with the list dominated by areas outside of the metropolitan centre. Sydney fared better for units than houses, with several suburbs from areas like Canterbury-Bankstown and Parramatta making the list, as well as the inner-city suburb of Haymarket.

The area with the highest rental yield for units was the inland town of Moree, close to the Queensland border. Moree is an agricultural hotspot; with a Gross Regional Product of $750 million, it's one of the most productive LGAs in the nation for agriculture. It's famous for crops like cereal and cotton, and also produces sheep, cattle, oil seeds, olives and pecan nuts. Landlords with units in Moree can expect a typical yield of 8% p.a.

Picture by Henrique Felix on Unsplash

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