Market/Finance News: Rental yields for Melbourne apartments grow

By the resi financial blog team, 16 April 2014

Should I invest in apartments in Melbourne

Apartments in Melbourne are becoming more popular as more people begin to embrace medium-sized dwellings in lieu of traditional family homes in the Victorian capital. As this shift begins to occur, these properties are beginning to attract higher rental yields, highlighting the potential for property portfolio expansion

New data from the Real Estate Institute of Victoria (REIV) has found that two-bedroom apartments across the city now have a median weekly rental yield of $390, a 1.3 per cent increase over the December quarter. In comparison, three-bedroom homes attract a median weekly rental yield of just $370. 

However, the largest growth in rental yields since the December quarter was for one-bedroom apartments, which soared by 2.7 per cent. These trends are expected to continue upwards as more people opt for accommodation in the nation's major metropolitan hubs like Melbourne in the coming years. 

REIV Chief Executive Officer Enzo Raimondo said this expansion - and the subsequent attraction of renters - has to do with the growing "state of the art" lifestyle appeal that comes from living in modern apartments. Furthermore, he noted the general location of these properties as another drawing factor. 

"This locational factor has some bearing on rents for houses and apartments - however the clear difference between the rental price for a two-bedroom apartment in comparison to a family home does highlight the genuine appeal of newer apartments," said Mr Raimondo in an April 16 release. 

"While houses boast large living areas and yards, apartments - with the latest in interior design and impressive shared facilities - are yielding higher rents."

As capital cities continue to grow and develop in the coming years, it could be beneficial to consider investing in apartments and units. The addition to your portfolio will help increase the diversity of returns, aiding growth of your profits in the long term. 

Categories: Home Loans, Property Investment