A Finance blog by Paul Bennion.

Strong rental returns are a good indicator of a city’s property investment potential, with rising rental yields an attractive buying incentive for many investors.

With this in mind, what will be Australia’s top property investment spots for 2013?

According to the latest figures from Australian Property Monitors (APM), Perth, Darwin and Brisbane have been strong performers with rising weekly rents and improving rental yields.

Both Perth and Darwin achieved double digit increases in weekly rents for the 12-month period ending September 2012. APM’s figures show that median weekly rents for apartments in Perth jumped by 11.4%, while weekly rents in Darwin increased by 15.2%.

Property investors in Darwin and Perth are now earning the highest rental returns of all Australian apartment investors at 6.10% and 5.73% respectively, followed by investors in Brisbane who have also experienced a strong improvement in yields. Significantly, investors with apartments in Darwin, Perth and Brisbane are now achieving higher rental returns than those with apartments in Sydney and Melbourne.

DEPPRO Managing Director, Paul Bennion said cities with rental yields of between 5% and 6% are likely to be very attractive to property investors in the coming year.

With interest rates falling, investors are receiving lower return for their cash saving accounts so property will become a favoured investment option. Property markets, such as Perth and Darwin, that can offer investors rental yields of 6%, in addition to capital growth rates, will be very popular,” he said.

In 2013, it won’t be surprising to see property investors from throughout Australia becoming active in these high performing markets. DEPPRO is already undertaking a growing number of tax depreciation schedules for clients in Queensland, NSW and Victoria who are investing in properties in Perth and Darwin.

Rental returns for apartments by city

Source: Australian Property Monitors (September Quarter 2012)