Low yields for Bondi Beach house investors in RP Data top 50 most active rental suburbs list

Sydney's Bondi Beach has the highest median price – and one of the lowest yields for houses – among the most active rental suburbs across Australia.

It has a median house price of $1.4 million, and rentals reflect a yield of 3.7%, one of the lowest of the most active rental suburbs.

The original top 50 most highly rented suburbs list was compiled by RP Data’s Tim Lawless using 2011 ABS census data. The suburbs on the list are those with greatest proportion of rented dwellings, making no differentiation between units and houses. The list excluded suburbs with fewer than 200 dwellings or suburbs where more than 25% of rental dwellings are not privately owned.

Bondi Beach had some 60.1% of its dwellings rented out, with the bulk being units which typically reflected a 4.8% yield.

Houses, especially freestanding ones, are getting rarer at Bondi Beach, in part because of redevelopment and the high land tax that investors are required to pay. The median house yield is $1,000 per week. 

A single-storey three-bedroom two-bathroom house on 183 square metres of land is currently listed for rent at $3,000 per week through Natalie Sassoon of Laing + Simmons. RP Data shows it last sold for $955,000 in 2007.  

A four-bedroom house (pictured below) on 228 square metres that recently sold for $2.75 million through the principal of Raine & Horne Double Bay, Ric Serrao, is listed for rent at $1,900 per week. This gives a yield of 3.59%. 

Serrao says yields in that range are about normal for the suburb but they are somewhat offset by capital gains which he thinks will accelarate in a few years.

"I think it’s an average yield. In the earstern suburbs if you’re getting over 4 % in residential you’re probably doing well."

"Especially at Bondi where we have exciting redevelopments with the old hotelier club which is now  being redeveloped and the Boheme devlopment in Hall Street with a lot of new shops opening up.

"Also with the Swiss Grand redevelopment there’s a lot of new shops and new eateries so I think the lifestyle is improving month on end.

"I beleive in three years when these developments are completed, Bondi will experience a surge. I would think it would probably have an annual rate of 5% to 7% each year in three years' time."

He says the proximity of the suburb to the beach is what attracts renters to the area, but he says more owner occupiers are buying.

"The closer to the beach the higher the demand. With properties like the  the Swiss Grand closing down it will put pressure on rents."

"In my opinion now it's more owner occupiers buying. It's more often a local person upgrading when the family has gotten larger."

Westcourt in Queensland is the suburb with the highest yields for houses on the list of the top rental suburbs. The suburb earns a yield of 5.6% for houses, according to RP Data figures. It also had the highest yield for units.

In Westcourt 62.4% of homes are rented and the median price for houses is $295,000 – the lowest median price in the list. The median rental for Westcourt houses is $320 per week.

Property Observer has compiled a subsequent list of the top houses yields for those top rental suburbs. Eighteen of the suburbs on the original list lacked statisitically reliable data for houses.

Westcourt is followed by Melbourne and Hobart at 4.9%, and Gosford in NSW and West End in Queensland at 4.8%. 

The yields for houses in the list range from 3% in North Wollongong, NSW, and South Brisbane up to 5.6% in Westcourt.

Median house prices range from $295,000 in Westcourt, Queensland, to $1.4 million in Bondi Beach, NSW.

Bondi Beach has a yield of 3.7% for houses, with 60.1% of homes rented. 

Source: RP Data/ABS