Young investors attracted by high yields in the outer northern Melbourne: HTW residential

The inner and outer northern suburbs of Melbourne offer investors a variety of investment options from units to houses, each offering their own benefits, according to the latest Herron Todd White (HTW) residential report. 

The valuation firm took a look at rental yields across the nation. 

The report suggests the vast variety of property types in the area accommodates all types of investors, including people seeking to maximise potential yield and those looking at minimizing capital requirements.

"Honing in on Richmond, a popular inner eastern suburb due to its location and bustling lifestyle, it becomes apparent the suburb does offer opportunities for investment, however it does come with several barriers to entry," the valuation firm said. 

With a median price of $1.177 million for a house and a weekly median advertised rent of $678, the suburb’s major barrier of entry for investment is the requirement of significant amounts of capital to purchase.

It is noteworthy that this large sum only typically secures investors a two- bedroom, one-bathroom, no car park townhouse.

Multiplying the median rent per week by 52 results in a total rental income of $35,256.

Dividing this figure by the median rental price then results in a rental yield in the suburb of Richmond of 2.99% for dwellings.

"In contrast to the outer north, Mickleham requires significantly less up front capital for a greater return," the valuation firm said. 

The median price in Mickleham is $505,000 for a home, with a weekly median advertised rent of $410.

Using the yield calculation method, an investor would generate an annual rental income of $21,320 resulting in an annual yield of 4.22%.

"This yield is 40% greater than the suburb of Richmond, whilst also offering a significantly larger home (four bedrooms, two bathrooms, two car parking spaces)," the valuation firm added. 

"Higher yields in the outer suburbs such as Mickleham are attracting young investors who have less capital to invest.

"These higher yields are also giving them more security when it comes to mortgage repayments."