Average rental yield is one of the most important numbers for any property investor or homeowner thinking about renting out their property. It shows how much rental income your property generates compared with its value. It also helps you compare suburbs, property types and markets across Australia. With rental yields shifting in 2025 as rents rise in some cities and flatten in others, investors are using yield benchmarks more than ever to judge whether a property offers strong cash flow or carries risk.

In this guide, you’ll learn what average rental yield looks like across Australia in 2025. How it is calculated. How yields vary by city and property type. What a “good” yield really means, and how to use this metric to make clearer investment decisions. Whether you already own an investment property or you’re planning to rent out your home for the first time. These benchmarks will give you a realistic picture of what to expect.

Next step: Compare top real estate agents in your suburb to get tailored rental yield advice and insights for your property.

AUSTRALIA’S CURRENT AVERAGE RENTAL YIELDS (2025 Overview)

Rental yields have shifted noticeably across Australia through 2024 and 2025. Rents have continued to rise in most capitals because vacancy rates remain extremely low. Although, price growth has also pushed up purchase costs in several cities. The result is a national picture where yields vary widely, depending on affordability, supply, demand and the type of property.

This section breaks down the national averages, city-level results and structural differences across property types. The goal is to give investors and homeowners a realistic benchmark of what rental income performance looks like today.

National Overview

Most recent industry data places the national average gross rental yield for residential property at around 3.7- 5.0% in late 2025. Global Property Guide reports an average gross yield of 4.92% based on its dataset.

These figures confirm that Australia is still a relatively low-yield market for residential investors. This is mainly due to high property prices in major capitals such as Sydney and Melbourne. Although stronger yields remain in more affordable cities like Perth and Darwin.

A quick interpretation of the national range:

• Below 3.5%, typically very low income return.
• Between 3.5% and 4.5%, considered normal for metropolitan markets.
• Above 5%, stronger income performance is often found in regional areas or more affordable capitals.

Gross yield does not yet factor in costs. Net yield will always be lower once running expenses are deducted.

Capital City Rental Yields in 2025

Using BambooRoutes’ comparative capital city dataset, here is a clearer breakdown of gross yields:

Sydney (approximately 3.1%)

Sydney records the lowest average yield among all capitals. High purchase prices push yields down even though rents have risen strongly. Investors rely more heavily on capital growth, not cash flow. This is common in many high-price global cities.

Melbourne (approximately 3.7%)

Melbourne sits in the middle range. Weaker growth in some segments during earlier years created more balance between price and rent but yields remain moderate.

Brisbane (approximately 3.7%)

Brisbane offers similar returns to Melbourne. Rents have been rising consistently due to tight vacancy although recent price increases have prevented yields from rising further.

Adelaide (approximately 3.7%)

Adelaide traditionally offers good rental demand and steadier price movements. which keep yields balanced. Entry prices are still lower than the east coast capitals. helping investors achieve mid-range yields.

Perth (approximately 4.3%)

Perth continues to outperform the major east coast capitals. Affordable house prices. strong migration and a tight rental market have lifted yields above four percent.

Darwin (approximately 6.6%)

Darwin remains the highest-yielding capital in Australia. Lower entry prices and strong rental demand deliver yields above six percent across many suburbs. Unit yields in particular can reach near eight percent in some cases.

Why this matters:
The spread from Sydney’s three percent to Darwin’s six percent shows that yield is heavily influenced by affordability. migration trends. availability of rental stock and demand from tenants.

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How Yields Differ by Property Type

Rental yield is closely tied to the type of property as well as the city. The most consistent pattern is that units often outperform houses by one to two percentage points. This is because:

• Units usually have a lower purchase price.
• Rental demand for smaller dwellings has increased due to affordability pressures.
• Investors can enter the market at a lower cost. boosting the yield equation.

For example:

• Darwin units achieve around 7.8% to 7.9%.
• Darwin houses sit closer to 6%.

This difference also appears in Perth and some parts of regional Queensland. Units may deliver stronger yield, but buyers must consider strata fees and long-term capital growth. Houses often deliver stronger capital appreciation over the long term because of land value.

Regional vs Capital City Yields

Regional areas consistently produce higher yields than the major capitals. because prices are lower and rents have risen sharply in popular lifestyle regions since 2020.

Examples include parts of:

• Regional Western Australia
• Regional Queensland
• Northern Territory regional towns

Some of these areas record yields of 6% to 8% or higher. Although, the risk profile increases due to smaller economies, fewer employment drivers and greater exposure to market swings.

For homeowners considering renting out their regional property. This means income performance may be stronger than in a capital city. However, vacancy risk and tenant demand may fluctuate if local conditions weaken.

What These Numbers Mean for Homeowners and Investors

Averages are helpful. but the meaning depends on your situation. 

If you are renting out a home you already own:

• Compare your expected yield with the city’s average.
• If your figure is well below the benchmark. review your rent level or property condition.
• Consider that gross yield is only the starting point. Net yield matters far more for long-term planning.

If you are an investor comparing markets:

• Low yields (three percent range) indicate growth-heavy markets such as Sydney.
• Mid-range yields (three point five to four and a half percent) represent balanced investment conditions.
• High yields (five percent plus) often appear in regional markets or more affordable capitals such as Perth and Darwin. but can signal higher risk.

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RENTAL YIELDS BY PROPERTY TYPE & LOCATION

Rental yields vary widely depending on what kind of property you buy and where it is located. Understanding these differences helps investors and homeowners judge whether their rent return is strong, weak or somewhere in between. Before diving into state-by-state results, it is helpful to break down why property type and location matter so much.

Why Property Type Affects Rental Yield

Units (apartments) usually produce higher rental yields than houses across Australia. This pattern appears in every capital city and most regional markets. The main reasons are:

• Units often have a lower purchase price.
• Demand for smaller dwellings has grown due to affordability pressure and migration.
• Units in high-density areas attract consistent rental demand from students, young professionals and short-term workers.
• The rental price gap between houses and units is often smaller than the purchase price gap. which lifts the yield.

Units frequently outperform houses by around one to two percentage points in major markets.

Examples:

• Darwin units: approx. 7.8–7.9% gross yield.
• Darwin houses: approx. 6.0% gross yield.
• Perth units: often above 5.0%, with some suburbs higher.

While units can deliver better cash-flow, houses typically offer better long-term capital growth because of their greater land content. Investors need to balance immediate income with long-term wealth building.

Why Location Affects Rental Yield

Location is the strongest driver of yield variation across Australia. The differences are especially noticeable between:

• Expensive vs affordable capitals
• Regional towns vs major cities
• Inner-city areas vs fringe suburbs
• Mining towns vs diversified economies

Broad price trends explain most of this. High-priced cities like Sydney and Melbourne naturally produce lower yields even when rents rise. Affordable markets such as Perth or Darwin deliver stronger yields because the rental return makes up a larger percentage of the purchase price.

Regional towns often record the highest yields because prices are significantly lower, and in many areas rental supply remains tight.

Capital City Yield Comparison (Houses vs Units)

Below is a simplified snapshot based on accessible industry data (primarily BambooRoutes and Global Property Guide):

The spread from 2.6% (Sydney houses) to nearly 8% (Darwin units) highlights the importance of carefully comparing yield benchmarks before buying an investment property or renting out a home.

Regional Rental Yields (High-Performing Areas)

Regional markets continue to offer some of the strongest gross yields in Australia in 2025. although risk varies by location. Lower property prices and strong population shifts since 2020 have lifted returns.

Examples include:

• Parts of regional WA, where units can achieve 6–8% yields.
• Mining-influenced towns in WA and QLD. where yields may exceed 8% but carry high risk due to economic sensitivity.
• Regional NT suburbs where both houses and units often outperform capital city benchmarks.

These higher yields appeal to cash-flow investors. Although, buyers need to assess vacancy risk, employment diversity and long-term growth prospects.

What This Means for Homeowners deciding whether to rent out their property

If you own a home and you’re thinking about renting it out:

• Compare your expected yield to the typical returns in your city or region.
• If your area usually records higher yields (Perth, Darwin, regional WA/QLD), rental income may comfortably offset costs.
• If your area is a lower-yield city (Sydney, Melbourne), your strategy may need to rely more on long-term growth or specific improvements to lift rent.
• Units can deliver better cash flow, but factor in strata fees before calculating net return.
• Houses may appear less profitable upfront but often deliver better long-term equity growth.

Knowing your yield position helps you decide whether renting your property is financially worthwhile.

How to Calculate and Use Rental Yield in Your Investment Strategy

Rental yield looks simple on the surface. It is just rent divided by property value. In practice, the way you calculate and interpret it can completely change your view of whether a property is a smart investment or a cash flow headache. In this section we walk through the exact steps to calculate gross and net yield, then show how to apply those numbers to real decisions as a homeowner or investor.

How to Calculate Gross Rental Yield

Gross rental yield is the starting point. It ignores expenses and looks only at income and property value. This makes it useful for quick comparisons between suburbs and properties.

Gross rental yield formula

Gross rental yield = (Annual rent ÷ Property value) × 100

You can calculate it in four simple steps.

1. Work out the weekly rent
   Use the rent you currently receive or the realistic rent your property could achieve based on recent local leases.
2. Convert weekly rent into annual rent
   Multiply the weekly rent by 52.
   • Example. $700 per week × 52 = $36,400 per year.
3. Decide which value number to use
   You can use:
   • The purchase price if you just bought the property, or
   • The current market value if you have owned it for a while.
     For yield benchmarking, current value is usually better, because it reflects today’s potential return.
4. Apply the formula
   Divide annual rent by property value. Then multiply by 100 to convert to a percentage.

Example: Sydney unit

• Weekly rent: $700
• Annual rent: $36,400
• Current market value: $800,000

Gross yield = ($36,400 ÷ $800,000) × 100
Gross yield = 0.0455 × 100
Gross yield = 4.55%

On the surface, this looks like a reasonable yield for a Sydney unit but remember this is before costs.

Moving From Gross to Net Yield

Net rental yield shows what you keep after paying the main running costs. This is much closer to your true income return. It is also the number that matters most to your cash flow.

There is no single fixed rule for which expenses to include. However, most investors consider:

• Property management fees
• Council and water rates
• Strata levies (if any)
• Landlord and building insurance
• Routine maintenance and repairs
• Average vacancy allowance

Some investors also factor in interest on their loan when they model their cash flow. For yield comparison, many people separate loan costs, otherwise, two identical properties can show different yields just because the owners have different loan sizes.

Net rental yield formula

Net rental yield = (Annual net income ÷ Property value) × 100

Where:
Annual net income = Annual rent minus annual operating expenses

Example (Using the Sydney unit above):

1. Gross annual rent. $36,400
   
   
2. Estimate annual expenses:
   
   
   • Property management: $2,500
   • Council and water rates: $2,200
   • Strata levies: $4,000
   • Insurance: $900
   • Maintenance allowance: $1,000
   • Vacancy allowance (two weeks rent): about $1,400

Total operating expenses: $12,000 (rounded for simplicity)

1. Net annual income
   $36,400 – $12,000 expenses = $24,400
   
   
2. Net yield
   Net yield = ($24,400 ÷ $800,000) × 100
   Net yield = 0.0305 × 100
   Net yield = 3.05%

This example shows how quickly costs can reduce the headline yield. A gross yield of 4.55% falls to around 3.05% once realistic expenses are included.

Comparing Two Similar Properties in Different Cities

Imagine you are considering two investments.

Property A. Sydney unit

• Value: $800,000
• Weekly rent: $700
• Gross yield: 4.55% (from earlier example)
• Net yield after expenses: about 3.05%

Property B. Perth unit

• Value: $550,000
• Weekly rent: $650
• Annual rent: $33,800
• Gross yield: ($33,800 ÷ $550,000) × 100 = 6.15%

Now estimate Perth expenses.

• Property management: $2,200
• Rates: $2,000
• Strata: $3,200
• Insurance: $800
• Maintenance: $1,000
• Vacancy allowance: $1,300

Total expenses: $10,500

Net income. $33,800 minus $10,500 = $23,300
Net yield. ($23,300 ÷ $550,000) × 100 ≈ 4.24%

What this shows

• Gross yield difference = 4.55% vs 6.15%
• Net yield difference =  around 3.05% vs 4.24%

Both properties might have similar out of pocket cash flow after loan costs, but the Perth property gives you more income relative to its value. On the other hand, you might expect stronger long term capital growth from the Sydney market. This is where your strategy becomes central.

Regional High Yield House vs Capital City House

Property C. Regional house

• Value: $450,000
• Weekly rent: $550
• Annual rent: $28,600
• Gross yield: ($28,600 ÷ $450,000) × 100 = 6.36%

Assume higher relative expenses due to distance and maintenance.

• Management: $2,000
• Rates: $2,200
• Insurance: $1,100
• Maintenance: $1,800
• Vacancy allowance (three weeks): $1,650

Total expenses: $8,750
Net income: $28,600 minus $8,750 = $19,850
Net yield: ($19,850 ÷ $450,000) × 100 ≈ 4.41%

Property D. Capital city house

• Value: $950,000
• Weekly rent: $800
• Annual rent: $41,600
• Gross yield: ($41,600 ÷ $950,000) × 100 ≈ 4.38%

Assume expenses.

• Management: $2,800
• Rates: $2,500
• Insurance: $1,200
• Maintenance: $1,800
• Vacancy allowance (two weeks): $1,600

Total expenses: $9,900

Net income: $41,600 minus $9,900 = $31,700
Net yield: ($31,700 ÷ $950,000) × 100 ≈ 3.34 percent

What this shows

• The regional house has a higher gross and net yield.
• The capital city house has lower yield but may offer stronger long term growth and a deeper market if you need to sell.
• Your choice depends on whether you value cash flow today more than potential equity growth tomorrow.

How to Use Yield to Compare Potential Investments

When you assess two or more properties, yield helps you:

1. Filter quickly. Remove options with extremely low gross yields unless they have exceptional growth fundamentals.
2. Rank by income strength. Properties with higher net yields often put less strain on your personal budget, especially in a higher rate environment.
3. Test “too good to be true” deals. Very high advertised yields can indicate hidden risks such as poor location, limited tenant demand or special conditions. Always look behind the headline number.
4. Check alignment with your risk profile. If you are conservative or close to retirement, you may prefer higher net yields and steady cash flow rather than speculative growth.

Yield is not the only metric but it is one of the fastest ways to compare different markets and property types on a like for like basis.

Linking Rental Yield to Your Investment Strategy

There are three broad strategy types. Yield plays a different role in each one.

1. Growth focused strategy

You are comfortable with lower yields if:

• The suburb has strong long term growth drivers.
• Vacancy rates are low and stable.
• You plan to hold the property for ten years or more.

In this case, you might accept a gross yield close to the city average, or even slightly below, in return for higher capital growth potential. You still want the property to be manageable in terms of cash flow, but income is not the main goal.

2. Balanced growth and income strategy

You want a mix of reasonable yield and decent growth.

• You look for yields slightly above the city average.
• You prefer suburbs with mixed demand. such as families, professionals and downsizers.
• You may consider both houses and units depending on the numbers.

This approach suits many investors in middle life stages who want both wealth building and some help with holding costs.

3. Income focused strategy

You prioritise strong yield and cash flow.

• You target higher yielding markets such as parts of Perth, Darwin or regional areas.
• You accept that capital growth may be slower or more volatile.
• You are often using property to support lifestyle or retirement income.

Here, net yield takes centre stage. You pay close attention to expenses, vacancy risk and tenant quality.

What This Means for Homeowners Considering Renting Their Property

Most homeowners thinking about leasing their home focus on one question. “Will renting my property actually make financial sense?” Rental yield gives you the clearest starting point but the real answer depends on your mortgage, expenses, local tenant demand and your long-term plans. This section breaks down the factors in detail so you can make a confident, well-informed decision.

Why Yield Matters More for Homeowners than Many Realise

Homeowners often assume that simply renting their home will bring in healthy income. But rental income can be misleading if you don’t compare it with:

• Your mortgage repayments
• Your expected costs
• Your property’s current market value
• Vacancy risk
• Tax considerations

Yield helps you understand whether rental income covers a meaningful portion of your expenses or whether renting could actually cost you money each month.

For example,

• A property with a 3%  in a high-price suburb may deliver strong long-term growth but weak cash flow.
• A property with a 5–6% may cover a large share of your mortgage and expenses.
• A property with a 6–8% (common in Darwin or regional markets) might produce net income every year.

Without yield as a benchmark, you are guessing.

If Your Expected Yield is Below Your City Average

If your estimated yield is below your city’s normal benchmark  for example:

• Below 3 % in Sydney
• Below 3.5% in Melbourne
• Below 4% in Perth
• Below 5% in Darwin

Then renting out your home might feel tighter financially than expected. In this scenario, homeowners often consider:

Option 1: Lift the rent through improvements

Small upgrades can justify higher rent. Examples include:

• New paint
• Updated lighting
• Fresh flooring
• Bathroom resurfacing
• Adding heating/cooling
• Kitchen appliance upgrade

These low to mid-cost improvements can increase rent by 5–15%in some suburbs.

Option 2: Reduce vacancy

If your area has low vacancy, you can price your home competitively and secure a stable tenant quickly. Lower vacancy strengthens net yield significantly.

Option 3: Consider selling instead

If your yield is far below average and cash flow remains negative, selling may be a better financial choice especially in a rising market where your property may achieve a strong sale price.

If Your Expected Yield is Above Your City Average

If your yield is comfortably above local benchmarks, for example:

• A Sydney property achieving 3.8–4.2%
• A Perth property above 5%
• A Darwin property above 7%

Then, renting may be a strong option. Benefits include:

• Strong rent demand
• Higher likelihood of covering your mortgage
• Better long-term cash flow
• Lower risk of extended vacancy
• More flexibility if you plan to move back later

In high-yield areas, many homeowners choose to rent their property even if they eventually plan to sell. They build income first, then sell later when they are ready.

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How to Decide Whether Renting or Selling is Smarter

To make the decision properly, analyse three things:

1. Cash Flow Position

Calculate:

• Net yield
• Monthly rental income
• Monthly loan repayments
• Monthly ongoing expenses
• Likely tax position

If the numbers show the property costs you more than it earns and you do not have a strong strategic reason to hold. Selling may be the better move.

2. Market outlook

Ask:

• Is the suburb expected to grow?
• Are more rental properties coming onto the market?
• Are rents rising or flattening?
• What is the vacancy rate doing?

If growth prospects are strong and rent demand is rising, holding and renting may make sense.

3. Your long-term plans

Renting can be a strategic choice if you:

• Plan to move back into the property later
• Want to keep the home for children in future
• Expect the area to grow strongly
• Have a small mortgage
• Prefer income over sale proceeds

Selling may be smarter if:

• You need capital for your next home
• Cash flow is negative and unsustainable
• The suburb has limited growth outlook
• You prefer simplicity and no landlord responsibilities

There is no single correct answer. Your yield, cash flow and life plans should guide the decision.

CONCLUSION

Rental yield gives you one of the clearest indicators of your property’s income potential but the full picture only emerges when you pair it with cash flow. long-term growth prospects and your personal goals. The reality is that Australia’s yields vary sharply between cities, suburbs and property types. with units and more affordable markets consistently delivering higher returns than expensive capitals.

For homeowners deciding whether to rent or sell. comparing your expected yield to your city’s benchmark is a powerful first step. If your yield is above average, renting may offer strong income and flexibility. If it sits well below local norms, cash flow may be tight and selling could be the more strategic move.

The outlook for 2025–2026 remains stable. Rents are elevated. Vacancy is tight and supply remains constrained in many areas. meaning yields should generally hold. and in some markets, improve. As always, the best decision blends numbers with strategy, not one or the other.

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Related Readings

• How to Rent Out Your Property
• Renters’ Rights When Landlord Sells Property
• How To Sell Investment & Tenanted Property
• Best Time to Sell Your Property
• Property Management Fees