Investors seeking strong rental yields should look to regional and coastal areas, according to a leading real estate agency head.

With high prices in Sydney, the tight vacancy rates in Wollongong, Port Stephens and Nelson Bay have seen savvy buyers looking further out, said Raine & Horne CEO Angus Raine.

"With an average sale price nudging $600,000 across Sydney, it is little wonder that investors are being lured by properties in regional NSW," Mr Raine said.

Tamworth, Bathurst, Newcastle and Albury/Wodonga are aslo in investors' sights, with yields above six per cent.

"Smart investors are looking at regional centres with increasing populations as a result of Australia's growing education and tourism sectors, or towns that are enjoying spin-off's from the mining boom," he said.

Smart Propert Investor June 2012, page 6.