South-west city a hotspot for investors

The rental yield for properties is 4.8 per cent, which is well above that on offer in other regional centres.

Hamilton isn't far behind, with a rental yield of 4.5 per cent, while Camperdown has a yield of 4.2 per cent.

Rentals in Warrnambool are in high demand, but the yield isn't as high at 3.9 per cent.

Ballarat's return is just 2.5 per cent, while the yield in Bendigo is 2.8 per cent.

Surf Coast Real Estate company director Max Dolman said rental yields on Portland properties had increased in recent years.

"Portland is a great place to invest - with excellent return on your dollar," Mr Dolman said. He said investors could spend $450,000 on a property and charge $450 a week in rent.

"I think it's certainly a very good market to invest in," Mr Dolman said.

A shortage of rentals has driven up rent prices, he said.

"We're really struggling for rentals like everywhere in regional Victoria," Mr Dolman said.

An online search found nine Portland homes available to rent, with a four-bedroom home listed for $670 a week.

A two-bedroom partly furnished apartment was listed for $400 a week.

The median sale price for a home in Portland is $438,000, which has increased 7.8 per cent in the last quarter.

CoreLogic data shows the average cost of rentals in regional areas was 10 per cent higher than 12 months ago.

CoreLogic research analyst and report author Kaytlin Ezzy said the recent upwards trend in rents had occurred mostly in the absence of overseas migration, with such strong rental conditions attributable to a combination of low supply and higher demand due to shrinking household sizes.

"This sustained period of strong rental growth has seen national dwellings record the highest annual growth in rental values since December 2008, when rental demand was supported by record levels of international migration," Ms Ezzy said.

"However, the current surge in rental demand has occurred largely in the absence of overseas migration and has instead been driven by factors including low supply and a decrease in the average household size which has amplified domestic rental demand over the COVID period to date."

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