Highest Rental Yield in Perth: Where You Should Invest Right Now

It’s the question on every property investor’s mind: where can you find the highest rental yield in Perth? If you’ve been tracking the real estate market, you already know that the game has shifted. No longer is it just about holding a property and watching its value climb steadily over the years. Today’s savvy investors are chasing yield—cash flow that provides a return on investment while capital gains accumulate over time. Perth is a booming city, with certain suburbs showing significant potential for high rental yields. But where exactly should you focus your attention? Let’s dive into the details, suburb by suburb.

What is Rental Yield?

Before we explore which suburbs offer the highest rental yield, it's crucial to understand the concept. Rental yield is the annual rental income generated by a property as a percentage of its purchase price. It's a critical metric for investors, as it directly impacts cash flow. High rental yield areas are particularly attractive to investors seeking immediate income, as opposed to long-term capital growth alone.

There are two types of rental yield:

1. Gross rental yield: This is calculated before deducting expenses. It’s simply the annual rental income divided by the property’s value.

   Formula:
   Gross Rental Yield (%) = (Annual Rental Income / Property Value) * 100

2. Net rental yield: This is calculated after accounting for costs such as maintenance, property management fees, and other ongoing expenses.

   Formula:
   Net Rental Yield (%) = [(Annual Rental Income - Annual Expenses) / Property Value] * 100

Now that we’ve clarified that, let’s look at Perth’s highest-yielding suburbs.

Perth Suburbs with the Highest Rental Yield

Here are the top suburbs in Perth where you can expect the highest rental yields:

1. Balga (6.5% Gross Yield)

Located just 13 km north of Perth’s CBD, Balga is a hidden gem for property investors. With a median house price of approximately $350,000 and a high rental demand, you can expect a gross rental yield of around 6.5%. This is well above the national average, making it a prime candidate for those looking to maximize their cash flow.

2. Armadale (6.2% Gross Yield)

If you’re looking for affordable entry points into the Perth market, Armadale is a good place to start. With median house prices hovering around $300,000, investors can achieve rental yields upwards of 6.2%. Armadale has great transport links and a growing population, which continues to boost rental demand.

3. Ashfield (5.8% Gross Yield)

Another affordable suburb, Ashfield offers fantastic rental yield for investors who are willing to look beyond the obvious choices. With median house prices sitting around $400,000, Ashfield boasts a gross rental yield of 5.8%. Its proximity to the Swan River and the Perth CBD adds to its appeal.

4. Cannington (5.6% Gross Yield)

Located in Perth’s southeastern suburbs, Cannington is popular with both families and young professionals. With median house prices around $400,000 and solid rental demand, investors can expect gross yields of about 5.6%. Cannington’s proximity to Westfield Carousel and public transport hubs make it a convenient choice for tenants.

5. Midland (5.5% Gross Yield)

Midland has long been known as a transformation suburb, benefiting from significant investment in infrastructure and development. Its location on Perth’s eastern fringe makes it attractive to renters. Investors can secure a gross yield of 5.5%, with median house prices around $370,000.

6. Gosnells (5.4% Gross Yield)

Gosnells, another southeastern suburb, offers a combination of affordable housing and strong rental demand. With median house prices around $350,000, it’s possible to achieve gross yields of 5.4%.

How to Maximize Your Rental Yield

Even in high-yield suburbs, maximizing your rental yield requires careful planning. Here are some strategies:

1. Renovate for Profit

Small cosmetic improvements can have a large impact on rental prices. Think about upgrading kitchens, bathrooms, and adding energy-efficient features that appeal to renters. In areas like Balga and Armadale, a modest investment in renovations can result in a significant increase in rental income.

2. Optimize Rent Pricing

Knowing when and how much to raise rent is key to maintaining a high yield. Study market trends and set your rental price competitively, especially in high-demand areas like Ashfield and Cannington. Offering flexibility with lease terms can also attract quality tenants willing to pay more for stability.

3. Consider Short-Term Rentals

In suburbs like Midland and Ashfield, where tourism and transient populations are more common, short-term rentals through platforms like Airbnb can yield much higher returns than traditional long-term leases. The catch? They require more management, but the returns can be worth it if done right.

Pros and Cons of High Rental Yield Suburbs

Pros

• Immediate Cash Flow: In high-yield areas, your property generates more income compared to low-yield regions, which can help cover mortgage repayments and other expenses quickly.
• Lower Entry Prices: Suburbs with high rental yields often have more affordable property prices, making it easier for new investors to enter the market.

Cons

• Potential for Slower Capital Growth: While high-yield suburbs like Balga and Armadale provide better cash flow, they might not experience the same capital growth as more affluent suburbs in Perth’s inner-city.
• Higher Risk of Vacancy: Certain high-yield areas may have higher vacancy rates or be more affected by economic downturns. It’s essential to do thorough research before committing.

Perth Market Trends: What’s Next?

Looking at the broader Perth property market, investors are seeing a unique blend of high rental demand and limited housing supply. This is leading to significant rental increases, particularly in suburbs close to the city or with good transport links. Suburbs like Ashfield and Cannington are likely to continue their strong performance in the coming years.

Moreover, Perth is benefiting from a growing economy, driven by mining, technology, and education sectors. With more people relocating to Perth for work and lifestyle reasons, rental demand is expected to rise further, offering investors ample opportunities to secure high-yield properties.

Final Thoughts

While Perth offers many opportunities for investors seeking high rental yields, careful consideration of each suburb’s growth potential and market trends is essential. Suburbs like Balga, Armadale, and Cannington provide immediate cash flow with solid rental demand, making them prime targets for yield-focused investors. However, balance is key—combining high yield with potential for capital growth will ensure long-term success.

If you’re looking to dive into Perth’s property market, now is the time to act. The market is competitive, but with the right approach, you can secure an investment that not only provides strong returns today but also grows in value over time.