What Is a Good Rental Yield in Australia?
Rental yield is the annual rent as a percentage of the property's value. It tells you how hard your money is working before capital growth. A 5% yield on a $600,000 property means $30,000/year in rent, or $577/week. Simple — but the details matter.
Gross vs Net Yield
Gross yield is the simple calculation: annual rent divided by property price. It's the headline number agents love to quote because it looks better.
Net yield subtracts your annual expenses — council rates, water rates, insurance, property management fees, maintenance, strata levies, and land tax — then divides by the property price. This is the number that actually matters because it reflects what you keep.
Typical expenses on an Australian investment property run $6,000-$12,000/year depending on the property type and location. A property with 5% gross yield might only deliver 3-3.5% net yield after expenses.
What Numbers to Aim For
Below 3% gross: You're relying almost entirely on capital growth. Common in premium Sydney and Melbourne suburbs. The property costs you significant money to hold each year — you're betting the price growth makes up for it.
3-4% gross: The Australian average for established houses in capital cities. Manageable holding costs, reasonable balance between yield and growth potential.
4-5% gross: Strong yield. More common in regional areas, smaller capitals (Brisbane, Adelaide, Perth), and apartments. The rent covers most or all of your holding costs.
Above 5% gross: High-yield territory. Common in mining towns, regional centres, and lower-value suburbs. The risk is often lower capital growth or higher vacancy rates. Great cash flow, but do your homework on the local economy.
Calculate Your Rental Yield →Yield vs Growth: The Trade-Off
Australian property investing generally presents a choice: high yield or high growth, rarely both. A house in Sydney's eastern suburbs might yield 2.5% but grow 6-8% per year. A house in a Queensland mining town might yield 7% but barely grow at all.
Neither is inherently better — it depends on your strategy, tax position, and time horizon. If you're negatively geared, higher yield means less out-of-pocket cost. If you're in a high tax bracket, the tax deduction from negative gearing makes low-yield properties more affordable to hold.