Latrobe Valley tops in rental returns

Stephanie Charalambous

Latrobe Valley towns have been listed among Victoria’s highest rental yield areas with a three-bedroom house in Moe returning a 6.6 per cent gross yield, according to recent modelling.

This was second to a one-bedroom unit in Melbourne at a 6.7 per cent rental yield.

The Real Estate Institute of Victoria data modelling showed a three bedroom house in Morwell returned a gross rental yield of 5.7 per cent, while the same type of property in Churchill and Traralgon had a 5.6 per cent yield.

Rental yield is a measure of how much income an asset produces each year as a percentage of that asset’s value.

REIV president Robyn Waters said the strong performance of regional towns was likely a product of low rental vacancy rates.

“Demand for rental properties is at an all-time high and there is simply not enough stock on the market to meet demand in many areas,” Ms Waters said.

“For example, the rental vacancy rate for the Latrobe Valley – south and west Gippsland is sitting at 1.3 per cent which could go some way to explaining high rental yields for many towns in the area in our analysis.”

Stockdale and Leggo Latrobe Valley managing director Jim Demetrios said some of the area’s lower-valued properties were getting a rental yield as high as seven per cent and the local rental vacancy rate was around one per cent.

He said he’d seen a trend over the past two to three years of people moving to the Latrobe Valley from the eastern suburbs of Melbourne either renting or purchasing property.

“It’s been the affordability of the region along with the infrastructure the area’s got to offer,” Mr Demetrios said.

“I think it will continue on as Melbourne gets more and more unaffordable for people.

“Even people on low incomes here can still meet their financial commitments.”

The REIV figures show the median weekly rent for a Moe three-bedroom house as at June 2019 was $255 and the median price for that type of property was $200,000.

In Morwell and Churchill the median rent was $200 with an $181,000 median house price for Morwell and $185,000 for Churchill.

In Traralgon the median rent for a three-bedroom house was $300 with a $280,000 median house price.