As more people delay buying houses and opt to rent, rates for residential rentals are expected to climb when demand overtakes supply.

This means better rental yields for investors.Australian Property Investor　has identified the top five suburbs for rental returns in each state and territory in the country.

“The majority of the 40 suburbs with the highest gross rental yields are situated outside the nation’s capital cities, with only 15 located in the capitals and of those, most are in the smaller states,” says API deputy editor Vanessa De Groot.

“The best yields for properties are often found within mining or resource centers, especially in Queensland, South Australia and Western Australia. But while investors can find good returns in these areas, they also need to be aware of the risks associated with them and before buying, do thorough research.”

With a yield of 13 percent, Roxburgh Park in Victoria was the highest yielding suburb in the list of top 40 suburbs with the highest gross rental yields according to RP Data research. It was the only suburb in Victoria’s capital city of Melbourne to make the top five yielding suburbs of the state.

The top yielding suburbs in the other states and territories were:

Western Australia – South Hedland (12.9 percent)
New South Wales – Sapphire Beach (9.5 percent)
Queensland – Sippy Downs (9.7 percent)
South Australia – Whyalla (7 percent)
Australian Capital Territory – City (5.9 percent)
Northern Territory – Woodroffe (6.4 percent)
Tasmania – Queenstown (8.7 percent)

“While the 40 suburbs in API’s list are noted to have the best yields, properties in these areas won’t necessarily be cash flow positive,” says De Groot. “Investors need to do their own research and assess their own financial situation to determine if a particular property will provide them with positive cash flow.”

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