Soaring rents: The top 20 unit, house markets for investors in 2024
Rapidly rising rents have changed the property investment landscape, and the top 20 location lists in Australia, based on house and rent forecasts for 2024, are a crucial resource for property investors aiming to maximise their returns.
In 2024, the Australian rental market is poised for significant upheaval, characterised by a substantial escalation in rental costs that is set to exert intense pressure on household budgets nationwide.
In this comprehensive analysis provided exclusively to API Magazine and collated by Suburbtrends, it is anticipated that there will be an average increase of 11 per cent in house rents across Australian suburbs.
Even more striking is the forecasted surge in unit rents, which are expected to climb by an astonishing 27 per cent.
This unprecedented rise underscores a challenging landscape for renters, particularly in the unit market where affordability has traditionally been a key attraction.
While rent reductions are anticipated in a select few suburban areas, a mere 7 per cent of suburbs are likely to witness a decrease in house rents.
This contrast highlights a relatively stable yet strained market for houses compared to units. The unit market, in particular, stands out for its acute rent hikes, driven by a complex interplay of demand and affordability.
Despite the looming affordability crunch, certain suburbs—particularly those in the unit market—present notable opportunities for investment, buoyed by the dual prospects of robust rent growth and maintained affordability.
From the Suburbtrends analysis, these trends have been dissected and the top-performing suburbs identified, offering critical insights for navigating this dynamic landscape, highlighting areas with the greatest potential for rental yield and investment return amidst the broader context of market volatility.
These are the top 20 unit investment suburbs based on forecast rent growth, and factoring in present affordability and overall investment attractiveness.
Top 20 - Units
| State | Suburban area | Median price | Yield estimate | Investor score |
|---|---|---|---|---|
| SA | Goodwood - Millswood | $452,000 | 5.2% | 95 |
| SA | St Peters - Marden | $440,000 | 5.1% | 94 |
| WA | Mosman Park - Peppermint Grove | $350,000 | 7.1% | 94 |
| SA | Walkerville | $412,000 | 6.3% | 93 |
| WA | Stirling - Osborne Park | $390,000 | 6.0% | 91 |
| QLD | Corinda | $520,000 | 5.0% | 91 |
| WA | East Fremantle | $570,000 | 5.2% | 91 |
| ACT | Hackett | $345,000 | 6.3% | 91 |
| WA | North Perth | $532,000 | 5.5% | 90 |
| WA | Mount Hawthorn - Leederville | $605,000 | 5.2% | 90 |
| WA | Mount Lawley - Inglewood | $445,000 | 5.6% | 90 |
| QLD | Macgregor | $520,000 | 5.2% | 90 |
| SA | Prospect | $450,000 | 5.4% | 90 |
| QLD | Sherwood | $515,000 | 5.6% | 90 |
| WA | Wembley - West Leederville - Glendalough | $335,000 | 7.0% | 89 |
| QLD | Toowoomba - East | $378,000 | 5.2% | 89 |
| QLD | Ascot | $575,000 | 5.2% | 89 |
| SA | Bellevue Heights | $338,000 | 5.5% | 89 |
| WA | City Beach | $435,000 | 7.5% | 89 |
| ACT | Lyons | $385,000 | 5.9% | 89 |
The 2024 outlook for the Australian rental market signals a period of significant adjustment, with steep rent increases set to challenge both renters and investors.
A pivotal aspect of our analysis is the examination of rental affordability, a metric that gauges the share of household income dedicated to rent payments.
South Australia and Western Australia dominated the unit top 20 list, with 13 entries.
Projections indicate that, on average, Australian renters will allocate 32 per cent of their household income to rent by December 2024, based on median household income figures adjusted to future values.
Units, however, emerge as a comparatively more affordable option, consuming an average of 26 per cent of household income nationwide. This relative affordability is identified as a key driver behind the pronounced rent increases projected for the unit market.
Where are house rents set to deliver investor gains?
With rental yields as high as 12.1 per cent, the top 20 suburbs identified as delivering investors with the best returns based on a range of variables makes for compelling reading.
The list was dominated by Perth and regional Western Australian suburbs, with 12 of the top 20.
Queensland had five of the top 20, including the area identified as the best prospect for houses.
Tellingly, no Victorian areas appeared in either list and New South Wales had just one, a remote rural town.
These are the top 20 house investment suburbs based on forecast rent growth, and factoring in present affordability and overall investment attractiveness.
Top 20 - Houses
| State | Suburban area | Median price | Yield estimate | Investor score |
|---|---|---|---|---|
| QLD | Pittsworth | $380,000 | 5.5% | 84 |
| SA | Port Pirie surrounds | $260,000 | 6.0% | 84 |
| WA | Kulin | $155,000 | 8.4% | 82 |
| WA | Harvey | $400,000 | 7.2% | 81 |
| NSW | Tumbarumba | $280,000 | 6.8% | 81 |
| WA | Glen Forrest - Darlington | $851,000 | 4.5% | 80 |
| WA | Parkwood - Ferndale - Lynwood | $590,000 | 4.8% | 80 |
| NSW | Cobar | $210,000 | 7.4% | 79 |
| WA | Thornlie | $550,000 | 5.2% | 79 |
| WA | Noranda | $720,000 | 4.7% | 79 |
| WA | Chidlow | $570,000 | 5.2% | 78 |
| WA | Canning Vale (East) | $750,000 | 4.5% | 78 |
| WA | Helena Valley - Koongamia | $720,000 | 4.7% | 77 |
| QLD | Wambo Shire, including Jandowae | $329,000 | 6.6% | 77 |
| WA | Belmont - Ascot - Redcliffe | $610,000 | 5.1% | 77 |
| QLD | Roma surrounds | $150,000 | 12.1% | 76 |
| WA | Huntingdale - Southern River | $580,000 | 5.6% | 76 |
| WA | Lockridge - Kiara | $565,000 | 5.3% | 76 |
| QLD | Goondiwindi | $455,000 | 4.9% | 76 |
| QLD | Crows Nest - Rosalie Plains | $425,000 | 4.9% | 75 |
Among the top 20 house markets identified based on rental growth, there was a massive weighting towards affordable suburbs.
The average median house price for all 20 areas was just $477,500, only marginally above the average for units of $449,600.
Affordability remains a crucial consideration in the rental housing market, affecting not only renters but investors as well.
How the lists were compiled
The selection criteria for our final top 20 lists published here (Top 100 lists are available in the full report) were grounded in three main metrics.
- The forecasted rental increase over the next 12 months
- 2. Current rental affordability, defined as less than 30 per cent of household income
- 3. The proprietary investor score ranking is a multifaceted approach ensuring a balanced perspective, recognising the interplay between future rental growth potential, present affordability, and overall investment attractiveness.
