Last reviewed September 2026 by Megan Birot, Content Editor, OurTop10. Figures checked against the sources named in the article.Rental yield is the first number an investor checks and the one most often misread. This guide explains what it measures, how to calculate the gross and net versions, what counts as a good yield in each Australian capital in 2026, and why a healthy yield can still leave you paying a shortfall every month. There is a calculator further down that runs any property’s figures, including the loan.
What rental yield is
Rental yield is the rent a property earns in a year, shown as a percentage of what the property is worth. It answers one question: for every dollar tied up in this property, how many cents come back as rent? A $700,000 house renting for $600 a week earns $31,200 a year, which is 4.5% of its price. That is its gross rental yield.
Investors use yield because it lets you compare a $450,000 unit in Adelaide with a $1.4 million house in Sydney on the same footing. Price and rent on their own tell you nothing about which one works harder. Yield does. It is also the first thing a lender’s assessor looks at when they decide how much of the rent to count toward your loan, and the number a buyer’s agent will quote back to you before anything else.
Gross yield and net yield
There are two versions and they give very different answers, so it matters which one someone is quoting.
Gross rental yield
Gross yield ignores costs. It is the annual rent divided by the purchase price, multiplied by 100. Every yield figure you see in a listing, a suburb report or a news article is gross, because it is the only one that can be worked out from public data. It is useful for comparing suburbs and for a first pass on a property, and it flatters every property equally, so it is fine for ranking and useless for deciding.
Net rental yield
Net yield takes out the running costs: agent management fees, council rates, water, insurance, strata levies, repairs, and an allowance for the weeks the property sits empty between tenants. It also adds the costs of buying, such as stamp duty, legal fees and the building inspection, to the price. Net yield is what the property actually returns before the loan and before tax. On most Australian residential property it lands between one and two percentage points below the gross figure.
How to calculate rental yield
Gross is a two-step sum. Multiply the weekly rent by 52, then divide by the price and multiply by 100.
- Weekly rent $600 x 52 = $31,200 a year
- $31,200 divided by $700,000 = 0.0446
- Gross yield: 4.46%
Net takes the same property and does the honest version. The costs below are typical for a freestanding house in a capital city; a unit swaps some of them for strata levies.
- Management fee at 7% of rent: $2,184
- Council rates and water: $2,200
- Landlord insurance: $1,800
- Repairs and maintenance: $2,000
- Two weeks vacant: $1,200
- Total running costs: $9,384
- Net rent: $31,200 minus $9,384 = $21,816
- Stamp duty, legal and inspection costs added to price: $30,000, so $730,000 in total
- Net yield: $21,816 divided by $730,000 = 2.99%
Same house, and the number has gone from 4.5% to 3%. That gap is where investors who only looked at the listing figure get caught. The calculator below does this sum for any property, and shows the cash position once the loan is added, which is the part yield leaves out.
Rental yield calculator: gross, net and what the property costs you each week
Enter the property, its running costs and the loan. The calculator returns gross and net yield, compares them to your city, and shows the weekly cash position before tax.
Built by OurTop10. Results are estimates for comparison only and are not credit advice. Figures stay in your browser and are not sent anywhere.
What a good rental yield is in Australia right now
Good is relative to the city, the property type and what you are trying to do. Cotality’s April 2026 figures put the national gross yield at 3.59%, up slightly from a low of 3.55% at the turn of the year, which was the first time in this cycle that yields had expanded rather than shrunk. Rents grew 5.7% across the capitals over the year and the vacancy rate was 1.7%, so the tenant side of the sum has been moving in the landlord’s favour even where prices have not.
By capital city, gross yields in April 2026 were:
- Darwin: 6.0%
- Perth: 4.3%
- Hobart: 4.0%
- Canberra: 4.0%
- Adelaide: 3.8%
- Brisbane: 3.6%
- Melbourne: 3.3%
- Sydney: 3.1%
Units yield more than houses in every capital, usually by half a point to a full point, because land is the expensive part of a property and land does not earn rent. Regional towns and outer suburbs yield more than the inner city for the same reason. A rough rule for 2026: a house above 4% or a unit above 5% in a capital city is a strong yield, anything under 3% is a growth play that will need topping up from your salary every month, and a listing quoting 7% or more in a small town is telling you something about that town’s job market, not about the property.
Yield is not cash flow
This is the mistake that costs the most. A 4.5% gross yield sounds like a return, and it is, on the whole price. But you did not pay the whole price. You borrowed most of it, and the loan has its own rate. Take the $700,000 house with a $560,000 loan at 6.1%: interest is $34,160 a year. Net rent is $21,816. The property is $12,344 a year, or $237 a week, short of paying for itself before any tax refund. Its yield is fine. Its cash flow is not.
The quick test is to put the net yield next to the interest rate. If the net yield is below the rate, and in most capital cities in 2026 it is, the property is negatively geared and you are funding the gap. Whether that is a sensible bet depends on the growth you expect and on the negative gearing rules that apply to when you bought, which changed in the May 2026 budget for established properties bought after 12 May 2026.
Yield or capital growth
The two usually pull against each other. The suburbs with the highest yields tend to be the ones where prices have grown least, because a high yield is mostly a sign that prices are low relative to rents. The suburbs with the strongest growth, inner Sydney and Melbourne for most of the last twenty years, have the lowest yields in the country. Investors who buy purely for yield end up with properties that pay their way and go nowhere. Investors who buy purely for growth end up funding a shortfall for a decade and hoping the sale makes up for it.
Most experienced investors settle somewhere in between, and the mix shifts with your situation. Someone on a high salary who can carry a shortfall for years can lean toward growth. Someone closer to retirement, or on a tighter income, needs the property to at least cover itself, and yield matters more. The lender also has a view: a property that covers more of its own repayment stretches your borrowing capacity further, so a higher-yielding first investment can be what makes the second one possible.
What moves a property’s yield
Where it is
Rents track what local tenants earn and how many of them are competing for a home. Prices track what buyers, including owner-occupiers with no interest in rent, will pay. Where owner-occupiers dominate, prices run ahead of rents and yields compress. Where renters dominate, near universities, hospitals, mines and CBD job centres, yields hold up. Perth and Darwin sit at the top of the 2026 table because their prices have not yet caught up with rents that rose 9% in a year.
What it is
Smaller and cheaper yields more. A two-bedroom unit will out-yield a four-bedroom house in the same street, because the house’s price carries the land and the unit’s does not. Houses tend to win on growth for the same reason. A dual-occupancy or a house with a granny flat is the exception that can do both, which is why they attract a premium.
What it costs to hold
Strata levies are the big one for units. A $500,000 apartment with $6,000 a year in levies and a lift, pool and gym to maintain can have a lower net yield than a house with a higher price and no levies. Old properties spend more on repairs, new ones more on depreciation, which helps at tax time but is not cash; the investment property tax guide explains both. The vacancy allowance is the number most investors set too low; two weeks a year is realistic in a tight market, four in a soft one.
Rent reviews
A yield calculated on the day you buy goes stale. Rent that rises 5% a year while the price is fixed at what you paid lifts your yield on cost every year. Most leases allow one review a year, and the states have different notice rules and, in some cases, limits on how often rent can rise. A property manager who does the review on time is worth their fee for that alone.
Using yield when you are choosing a property
- Get a written rental appraisal from a local agent, not the selling agent’s figure, and run the gross yield on that.
- Work out net yield with real costs: ask for the strata levies, the last rates notice and an insurance quote.
- Put net yield next to the loan rate. The gap, times the loan, is your annual shortfall.
- Check the suburb’s vacancy rate on SQM Research. Above 3% means tenants have options and your rent has less room to move.
- Compare the figure to the city benchmark above. A yield well above the city average is either a bargain or a warning, and it is usually the second.
Lenders assess investment loans on the rent discounted to 80% and the repayment at a rate three points above the one you will pay, so a property that looks comfortable at 4% yield can still fail the servicing test. Before you make an offer it is worth having a broker run the property through a lender’s calculator; the investment property loan guide covers what they look for, and the investment property calculator models the whole holding period.
Frequently asked questions about rental yield
How do I calculate rental yield?
Multiply the weekly rent by 52 to get annual rent, divide it by the purchase price, and multiply by 100. A $600 a week property bought for $700,000 has a gross yield of 4.46%. For net yield, subtract the annual running costs from the rent first and add buying costs to the price.
What is a good rental yield in Australia?
In 2026 the national gross yield is about 3.6%. A house above 4% or a unit above 5% in a capital city is strong. Below 3% the property will need topping up from your income each month and only makes sense if you expect solid capital growth.
What is the difference between gross and net rental yield?
Gross yield uses the full rent and the purchase price. Net yield subtracts management fees, rates, insurance, strata, repairs and vacancy from the rent, and adds stamp duty and legal costs to the price. Net is usually one to two percentage points lower and is the figure to use when deciding whether to buy.
Which Australian city has the highest rental yield?
Darwin, at 6.0% gross in April 2026, followed by Perth at 4.3%. Sydney is the lowest at 3.1% and Melbourne next at 3.3%. Units yield more than houses in every city.
Is a high rental yield always better?
No. High yields usually come from areas where prices are low relative to rents, which often means weak capital growth. A 6% yield in a single-industry town can lose value while a 3.5% yield in a well-located suburb doubles. Yield covers the holding cost; growth builds the wealth.
Does rental yield affect how much I can borrow?
Yes. Lenders add rent to your income, but only around 80% of it, and they assess the loan repayment at a rate about three points above the actual rate. A higher yield covers more of the assessed repayment and can lift your borrowing capacity, which is why yield matters even for investors focused on growth.
MANSOUR SOLTANI
Mansour has spent more than two decades involved in the purchase and sale of real estate, acquiring both investment and commercial properties throughout Australia, including in major cities and smaller regional locations.
He is the proprietor of a finance brokerage firm, overseeing a portfolio worth in excess of 200 million in loans and serving a diverse clientele across Australia and a regular contributor to money.com.au. This has equipped him with extensive knowledge in various investment tactics, allowing him to offer significant insight.