Rental Yield Australia: What's a Good Yield in 2026?

Rental yield is the primary metric investors use to compare investment properties. It tells you the annual return you can expect from rent relative to what you paid for the property. Understanding both gross and net yield helps you make more informed investment decisions.

Gross Rental Yield

Gross yield is the simplest calculation:

Gross yield (%) = (Annual rental income ÷ Property purchase price) × 100

For example, a property purchased for $650,000 that rents for $550 per week generates $28,600 per year. Gross yield = $28,600 ÷ $650,000 × 100 = 4.4%.

Gross yield is useful for quick comparisons but ignores all costs, so it overstates the actual return.

Net Rental Yield

Net yield is more realistic because it deducts ongoing costs from the rental income before calculating the return:

Net yield (%) = ((Annual rent − Annual costs) ÷ Property price) × 100

Typical annual costs to include:

• Property management fees (7–10% of rent, plus letting fees)
• Council rates and water rates
• Landlord insurance
• Maintenance and repairs (budget 1–1.5% of property value per year)
• Vacancy allowance (typically 2–4 weeks per year)
• Body corporate fees (for apartments and townhouses)

Using the same example: if annual costs total $9,000, net income is $19,600. Net yield = $19,600 ÷ $650,000 × 100 = 3.0%.

What is a Good Rental Yield in Australia?

Yields vary significantly by location and property type:

• Sydney and Melbourne — Gross yields of 3–4% are typical for houses; apartments are slightly higher
• Brisbane and Adelaide — Gross yields of 4–5%, with some areas exceeding 5%
• Perth — Has seen strong yield increases in recent years, 4–5.5%
• Regional areas — Often 5–7% gross, but vacancy risk is higher and capital growth may be lower

As a general guide, a gross yield above 4% is considered acceptable in major cities; below 3.5% means the property is heavily reliant on capital growth to produce a return.

Yield vs Capital Growth Trade-off

High-yield properties are often in regional or outer suburban areas where land values grow more slowly. Low-yield properties in inner-city areas tend to appreciate faster. Your ideal balance depends on your goals:

• Cash flow focus: prioritise net yield — useful if you need the investment to be self-funding
• Wealth building: accept lower yields in high-growth corridors, banking on long-term appreciation

Neither approach is universally better. Many experienced investors hold a mix.

Yield After Tax

If the property is negatively geared — costs exceed rent — the loss reduces your taxable income. This effectively increases your after-tax return. If you are in the 37% tax bracket and your property makes a $5,000 net loss, you save approximately $1,850 in tax. Your actual out-of-pocket cost is $3,150.

Conversely, if the property is positively geared, the net profit is added to your taxable income.

Yield as a Screening Tool

Use yield as a first filter when evaluating properties, not the only criterion. Also consider:

• Local vacancy rates (avoid areas above 3%)
• Tenant demographic and demand drivers (hospitals, universities, employment hubs)
• Future supply — large apartment developments can depress yields
• Land-to-asset ratio — properties with more land component tend to grow more

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Use the Investment Property Calculator to estimate gross yield, net yield, cash flow, and tax benefit for any property you are considering.