What Is a Good Rental Yield in Australia? Gross vs Net (and How to Check Any Suburb)

Rental yield is the number that tells you how hard your property works as an income asset — and in a market where capital growth can't be assumed, it's arguably the number that matters most. Yet “what's a good rental yield?” gets thrown around loosely. The honest answer: it depends on whether you mean gross or net, whether you're buying a house or a unit, and what you need the property to do in your portfolio.

Rental yield, defined

Rental yield is your annual rent expressed as a percentage of the property's value. It's the property world's version of an interest rate on your capital. There are two versions, and confusing them is the single most common mistake investors make.

Gross rental yield

Gross yield = (annual rent ÷ property value) × 100

Example: a home worth $600,000 rented at $560/week earns $29,120 a year. Gross yield = 29,120 ÷ 600,000 × 100 = 4.85%. Gross yield is quick and useful for comparing suburbs like-for-like — but it ignores every cost of ownership, so it always flatters the property.

Net rental yield

Net yield = ((annual rent − annual costs) ÷ (property value + purchase costs)) × 100

Net yield subtracts the real costs of holding the property: council rates, water, insurance, strata (for units), property management (~6-8% of rent), maintenance, and a vacancy allowance. It's a far more honest picture of what actually lands in your pocket — before mortgage interest and tax.

The gap between the two is large. As a rule of thumb, net yield often runs 1-2 percentage points below gross. On Estait's suburb data, for example, Toronto in NSW shows a gross yield of about 3.8% but a net yield of roughly 2.3% — the costs eat nearly a third of the headline. Cootamundra shows ~5.5% gross versus ~3.9% net. Always ask which number you're looking at.

So what counts as a “good” rental yield?

There's no single magic figure, but here are realistic Australian benchmarks (as at 2026):

• Below ~3% gross: low-yield. Common in premium capital-city suburbs, where investors are effectively paying for expected capital growth. Usually strongly negatively geared.
• ~3.5% gross: around the current combined-capitals average (the combined-capitals gross yield sat at 3.5% in mid-2026, per Cotality).
• ~4-5% gross: solid. Often found in affordable metro pockets, larger regional centres and many units.
• 5%+ gross: high-yield. Typical of regional towns, some dual-income or granny-flat setups, and short-term-rental strategies. Higher yield usually signals higher risk or lower expected growth — not a free lunch.

The critical caveat: a high yield is not automatically a good investment. Regional and outer markets can offer 5-6% gross but come with thinner capital growth, higher vacancy risk and less liquidity. A 3% yield in a supply-constrained inner suburb might build more wealth over a decade. Yield is one lens; growth, risk and your own cashflow needs are the others.

Houses vs units: why yields differ

Units almost always show higher gross yields than houses in the same suburb, because the land component (which drives price but not rent) is smaller. A unit might yield 4.5% gross where a nearby house yields 2.8%. But houses have historically captured more capital growth because you're buying more land. The “right” answer depends on whether you're optimising for income now or growth later — exactly the trade-off a good suburb tool helps you weigh. Compare house and unit yields side by side on the Estait Rankings.

Yield and the rate environment

Yield never exists in a vacuum — it has to be read against borrowing costs. With investor variable rates around 6.65% in 2026, a property yielding 3.5% gross (and less net) has a sizeable gap between the rent it earns and the interest it costs. That gap is the cash you tip in each year — the essence of negative gearing.

When rates are high and growth is flat, the yield-versus-mortgage gap is what determines whether you can comfortably hold. This is why, in the current market, more investors are screening for yields that at least narrow the gap, and looking hard at strategies — granny flats, dual-occupancy, short-term rental — that can lift a property's income above the standard long-term-rental figure.

How to check the rental yield of any suburb

1. Start with verified suburb data. Pull the median price, median rent, gross and net yield, vacancy rate and days-on-market. On the Estait Market Map, each of 6,000+ suburbs carries these figures plus a Hotspot Score, so you can rank income markets in seconds.
2. Cross-check the rent. Confirm the median rent against current listings for the same property type and size — asking rents move faster than published medians.
3. Build the net number. Deduct realistic costs (management, rates, insurance, strata, maintenance, vacancy) to get from gross to net. Don't skip this; the net yield decides your holding cost.
4. Test the alternative strategies. The same house might earn far more as a short-term rental or with a granny flat — but only where the rules and numbers allow. Check the short-stay rules first, then run a Property Report to compare long-term rent, Airbnb, granny flat, dual-occupancy and hybrid returns on one property.

Do that, and “what's a good yield?” stops being a vague benchmark and becomes a specific, verifiable number for the exact property in front of you.

The bottom line

A good rental yield in Australia is broadly 4-5%+ gross for an income-focused buy, with anything near 3.5% sitting around the capital-city average and 5%+ signalling a genuine cashflow (and usually higher-risk) play. But the number that actually matters is net yield read against your mortgage rate — and even then, yield is only half the story. Weigh it against capital-growth prospects, vacancy and your own serviceability, and always verify the figures for the specific suburb before you buy.

One timely note for 2026: with prices softening and rents still rising, gross yields are quietly expanding across much of the country — a “3% suburb” from two years ago may screen closer to 3.5% today. See what July's widening downturn means for investors for where that's happening.

Frequently asked questions