The top 20 Sydney suburbs to invest in

Higher rental yields attracting investors, says brokerage

By Priscilla Dickinson

19 Nov 2022

Rising interest rates and declining property values are two of the economic headwinds affecting property investors, but rising rental yields indicate there is good reason for investors to return.

Having peaked in January, similar to many other Australian cities, the Sydney property market has entered a downturn. CoreLogic October data shows the median property value in Sydney is $1.036 million, 8.6% below the same time last year.

According to ABS September figures, the new investor lending fell 6% over the month (down 15.3% over the year).

Turnkey Finance director Nick Atanasovski (pictured above left), who was awarded the Adelaide Bank Young Gun of the Year at the 2022 Australian Mortgage Awards, told MPA his Sydney brokerage knew that investors were returning to the Sydney property market.

“I believe the key driver is the improvement of rental yields over the last 12 months,” Atanasovski said.

Expectations that official cash rate rises would soon pause (ANZ is forecasting a peak cash rate of 3.85% by mid-2023) also provided positivity, he said.

To assist people looking to invest, MPA has compiled a list of the top 20 suburbs in Greater Sydney by highest gross rental yield, followed by the highest capital gain over the last five years.

The figures are based on CoreLogic data through to the end of October 2022.

CoreLogic head of research Eliza Owen (pictured above centre) shared insights on the suburb with the highest gross rental yield – Ropes Crossing in Blacktown, western Sydney – along with general commentary on rental yields.

Successful Ways senior real estate agent Gordon Puttick (pictured above right) provided additional commentary on recent developments and local amenities in Ropes Crossing, Currans Hill, Narellan Vale, Spring Farm and St Helens Park.

Low levels of available rental stock, combined with falling property values was driving higher rent yields Sydney-wide, Owen said.

“Rent yields are the rental income expressed as a portion of the purchase price, so this is leading to an expansion in rent yields that we have not seen in a very long time,” Owen said.

Owen said Sydney’s rental stock had been absorbed through a lower number of people per household during COVID-19, as people sought more space, together with the recent return of overseas migration.

Top 20 Sydney suburbs by gross rental yield

Ropes Crossing (Sydney - Blacktown)

Gross rental yield October 2022: 4%, October 2021: 3.4%
Vacancy rate October 2022: 0.2%
Median value: $749,179, 12-month change: -6.6%, 5-year change: 9.5%
Median weekly rental value: $554, 12-month change: 8.9%

This is a young family suburb with high levels of employment, relatively new built homes and high rates of mortgaged owner-occupier properties.

“For people just moving to Sydney, whether from overseas or interstate, it’s a relatively affordable location to rent or buy,” Owen said.

The region is close to employment hubs, including the industrial estate in St Marys, the developing Western Sydney Airport and the metro line between St Marys and the airport.

“Growth in rents in the suburb is compounded by relatively low rent listings (13 available where October has seen an average of about 28 rentals), and a low vacancy rate of about 0.2%,” Owen said.

The comparatively lower median value of $749,179 reflects the distance to central Sydney, and the nature of development across relatively new housing, she said.

“Unlike some of the older, established suburbs of western Sydney, houses in Ropes Crossing are not on the same generous block sizes. This means houses are developed closely together, with less space between neighbour[s], which erodes some of the benefit some people might see in buying in the outer suburbs of Sydney,” Owen said.

Puttick said Ropes Crossing had become popular with young families, due to its affordability, amenities such as parks and recreation areas, transport options and a convenient village shopping area. Recently, 2,200 new homes were developed in the suburb, he said.

“The suburb has a growing population and had an exceptionally low vacancy rate through 2021-22 of 0.2% - 0.4% which verifies it is a sought-after area,” Puttick said.

Currans Hill (Sydney - Outer South West)

Gross rental yield October 2022: 3.9%, October 2021: 3.4%
Vacancy rate October 2022: 0.2%
Median value: $819,793, 12-month change: -0.6%, 5-year change: 23.8%
Median weekly rental value: $613, 12-month change: 9.7%

Located within the local government area of Camden Council and part of the Macarthur region, Puttick said Currans Hill consists primarily of free-standing homes.

“There is a growing population predominantly made up of young families with children and maturing couples,” Puttick said.

The neighbourhood is leafy, clean and green, with a recreational park, lake and several huge reserves linked with scenic cycleways and walking paths, he said. It provides convenient bus transport options, good schools, easy access to amenities, a local supermarket and shops, cafes and restaurants.

“[It’s] not far from Western University, Mount Annan and Macarthur Square, providing a very good environment and friendly neighbourhood for families at an affordable price point within Camden dress circle,” Puttick said.

Airds (Sydney - Outer South West)

Gross rental yield October 2022: 3.8%, October 2021: 3.4%
Vacancy rate October 2022: 1.3%
Median value: $685,038, 12-month change: -2.4%, 5-year change: 19.2%
Median weekly rental value: $501, 12-month change: 8%

Narellan Vale (Sydney - Outer South West)

Gross rental yield October 2022: 3.7%, October 2021: 3.2%
Vacancy rate October 2022: 0.4%
Median value: $938,371, 12-month change: -0.3%, 5-year change: 25.4%
Median weekly rental value: $663, 12-month change: 12.2%

Located in the local government area of Camden Council and part of the Macarthur region, Narellan Vale is a thriving suburb popular with young families, Puttick said.

Local shops are available for daily needs, or residents can find more substantial shopping options in nearby Mount Annan, he said.

Emerton (Sydney - Blacktown)

Gross rental yield October 2022: 3.7%, October 2021: 3.2%
Vacancy rate October 2022: 4.8%
Median value: $628,300, 12-month change: -5.0%, 5-year change: (NA)
Median weekly rental value: $463, 12-month change: 12.6%

Spring Farm (Sydney - Outer South West)

Gross rental yield October 2022: 3.7%, October 2021: 3.3%
Vacancy rate October 2022: 0.4%
Median value: $932,252, 12-month change: 1.9%, 5-year change: 26.2%
Median weekly rental value: $658, 12-month change: 11.6%

Located on the east side of the Nepean River and part of the Macarthur region, Puttick said Spring Farm offers a family-orientated lifestyle with transport options and local shops, with nearby Mount Annan providing more substantial shopping options.

Cambridge Gardens (Sydney - Outer West and Blue Mountains)

Gross rental yield October 2022: 3.7%, October 2021: 3.4%
Vacancy rate October 2022: N/A
Median value: $752,637, 12-month change: 0.6%, 5-year change: 23.5%
Median weekly rental value: $544, 12-month change: 6.4%

Bidwell (Sydney - Blacktown)

Gross rental yield October 2022: 3.7%, October 2021: 3.2%
Vacancy rate October 2022: N/A
Median value: $641,463, 12-month change: -3%, 5-year change: 14.7%
Median weekly rental value: $471, 12-month change: 13.4%

Werrington Downs (Sydney - Outer West and Blue Mountains)

Gross rental yield October 2022: 3.7%, October 2021: 3.3%
Vacancy rate October 2022: N/A
Median value: $765,756, 12-month change: -0.6%, 5-year change: 21.3%
Median weekly rental value: $540, 12-month change: 7.4%

Wilton (Sydney - Outer South West)

Gross rental yield October 2022: 3.7%, October 2021: 3.2%
Vacancy rate October 2022: 3.6%
Median value: $1,083,169, 12-month change: 4.6%, 5-year change: 32.2%
Median weekly rental value: $746, 12-month change: 10.9%

Dharruk (Sydney - Blacktown)

Gross rental yield October 2022: 3.7%, October 2021: 3.2%
Vacancy rate October 2022: 2.9%
Median value: $644,018, 12-month change: -4.7%, 5-year change: 11.4%
Median weekly rental value: $464, 12-month change: 11.3%

Mount Annan (Sydney - Outer South West)

Gross rental yield October 2022: 3.6%, October 2021: 3.2%
Vacancy rate October 2022: 0.9%
Median value: $964,718, 12-month change: -0.6%, 5-year change: 25.5%
Median weekly rental value: $655, 12-month change: 12%

St Helens Park (Sydney - Outer South West)

Gross rental yield October 2022: 3.6%, October 2021: 3.4%
Vacancy rate October 2022: 0.6%
Median value: $711,024, 12-month change: -5.2%, 5-year change: 7.3%
Median weekly rental value: $500, 12-month change: 8.1%

Located 56km southwest of the central Sydney business district, Puttick said St Helens Park is a well-established suburb with a population of young families keen to get ahead in life. One of the more modern suburbs of Campbelltown, new subdivisions have been developed since 2006, he said.

“The vast majority of new development in the suburb is in the form of detached housing.
There is good local shopping, cafes and restaurants and transport links available,” Puttick said.

Blackett (Sydney - Blacktown)

Gross rental yield October 2022: 3.6%, October 2021: 3.1%
Vacancy rate October 2022: 2.7%
Median value: $640,974, 12-month change: -5.2%, 5-year change: 7.3%
Median weekly rental value: $463, 12-month change: 13.3%

Hebersham (Sydney - Blacktown)

Gross rental yield October 2022: 3.6%, October 2021: 3.1%
Vacancy rate October 2022: 1.3%
Median value: $649,852, 12-month change: -5.9%, 5-year change: 7.9%
Median weekly rental value: $464, 12-month change: 11.2%

Hassall Grove (Sydney - Blacktown)

Gross rental yield October 2022: 3.6%, October 2021: 3.1%
Vacancy rate October 2022: 1%
Median value: $743,589, 12-month change: -2.8%, 5-year change: 12.4%
Median weekly rental value: $509, 12-month change: 10.4%

Villawood (Sydney - Inner South West)

Gross rental yield October 2022: 3.6%, October 2021: 3%
Vacancy rate October 2022: 1.6%
Median value: $942,372, 12-month change: -7.1%, 5-year change: -1.1%
Median weekly rental value: $607, 12-month change: 11.4%

Bardia (Sydney - Outer South West)

Gross rental yield October 2022: 3.6%, October 2021: 3.2%
Vacancy rate October 2022: 3.1%
Median value: $984,452, 12-month change: -0.9%, 5-year change: 13%
Median weekly rental value: $625, 12-month change: 6.7%

Jamisontown (Sydney - Outer West and Blue Mountains)

Gross rental yield October 2022: 3.6%, October 2021: 3.2%
Vacancy rate October 2022: 0.7%
Median value: $823,138, 12-month change: -3.2%, 5-year change: 22.4%
Median weekly rental value: $562, 12-month change: 6.8%

Oakhurst (Sydney - Blacktown)

Gross rental yield October 2022: 3.6%, October 2021: 3%
Vacancy rate October 2022: 0.4%
Median value: $765,707, 12-month change: -4.9%, 5-year change: 7.7%
Median weekly rental value: $514, 12-month change: 9.6%.

As an extension to CoreLogic data, Puttick said other suburbs in Sydney are backed by good infrastructure and local amenities and provide value to investors and owner-occupiers. These areas are: Coogee, Randwick, Kingsford, Kensington, Parramatta (and close surrounds), Miranda, Neutral Bay (including Cammeray), Petersham and Bexley.

Sydney’s inner west provides a range of transport and entertainment options and has the infrastructure and lifestyle amenities to satisfy the fussiest of people, making it a good choice for renters, Puttick said.

Property prices in Petersham are lower than in the big name suburbs of Newtown, Erskineville and Enmore, yet proximity to restaurants, bars and amenities still make it an ideal place for a young person to live before starting a family, he said.

Atanasovski said the Central Coast and Blue Mountains are among the more popular regions that existing and new clients are currently interested in buying into.

CoreLogic data which included 19 suburbs within the Central Coast region showed gross rental yields ranged from 3.9% to 4.3%. The suburbs with the biggest annual jump in rental values were Gwandalan (12%, $582), Wadalba (11.6%, $679) and Summerland Point (11.3%, $583).

“It’s not a coincidence that a report from CoreLogic has shown the strong growth in rental yields in these regions during the last year,” Atanasovski said.

Nick Atanasovski was also awarded in Rising Stars 2023. Click here and learn more about the Best Mortgage Brokers Under 35 in Australia and how they are changing the mortgage industry.

The top 20 Sydney suburbs to invest in