East Sydney offers best rental returns – RP data

According to new information released by RP Data, investment properties located in Sydney’s eastern suburbs are providing investors with the greatest returns.

It seems that especially properties in the Sydney suburb of Woollahra have recorded an increase in advertised rents of 22.2 per cent over the year.

Suburbs of Sydney overall performed very well showing top rental returns and accounted for 23 of the 35 best performing capital city rental regions over 2010.

In contrast, the Perth council area, which is essentially the inner city region of Perth, recorded the most significant drop in average advertised rents over 12 months.

Median house rents declined by 21.5% over the year from $650/week to $510/week.

Perth overall did worse than other cities in terms of rental performers, accounting for 20 of the 35 weakest performing capital city markets for rents.

RP Data’s research analyst Cameron Kusher said while Perth rental returns had declined over the past 12 months, this was not a trend that he expects to continue over the longer term.

“With tight rental vacancies and ongoing demand for rental accommodation, we expect that weekly rents will increase in most capital cities,” he said.

“Although there was a surge in building approvals last year, in many instances this new supply won’t actually get to the market during 2011. Considering how difficult it is today to qualify for home loans as well as construction and development finance, there is an expectation that the number of new developments will be declining. . Because of this we are seeing fewer new high density developments taking place in inner city areas. These regions are particularly attractive for renters as they provide significant levels of amenity. With less new supply in most capital cities it is likely to create greater competition for available stock.”

The best five performing rental suburbs nationally were Woollahra and Burwood in Sydney, Sorell in Hobart and Claremont and the Nedlands in Perth.

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