Gross rental yields in Pakenham are currently between 4.2 and 4.7 percent, while the broader Officer and Pakenham area typically sees 4.0 to 4.5 percent. However, two rate rises in the past two months have tightened cash flow, meaning most properties in these suburbs are now negatively geared.
Yields in Pakenham
Pakenham is seeing gross yields of 4.2 to 4.7 percent. This figure has improved slightly because purchase prices have softened while rental rates have remained firm.
Comparison to inner Melbourne
The 4.0 to 4.5 percent yields found across the South East corridor are meaningfully better than Melbourne’s inner suburbs. Inner-city yields are currently lower, sitting between 2.5 and 3.2 percent.
Rental demand and vacancy
Vacancy rates remain below 2 percent across both Officer and Pakenham. This demand is being further tightened as recent rate rises push would-be buyers back into the rental market.
The honest reality
Net cash flow will be negative at current mortgage rates for most standard LVR buyers. The shortfall is larger than it was a year ago, though the gap between rent received and mortgage cost is more manageable here than in most other Melbourne markets.
Questions to consider
- Is your rental income currently below market because it hasn’t been reviewed in the last 12 months?
- How does a gross yield of 4.0 to 4.7 percent impact your specific after-tax cash flow?
- Are you targeting properties priced to today’s buyer reality, or are you looking at stock still priced at 2024 levels?
Talk to KR Peters for a straight-talking appraisal with no obligation.
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Market information is general in nature and reflects conditions
at the time of publication. For advice specific to your property,
contact KR Peters.