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Australia's rental yields currently range from 3.1% to 6.6% across major cities, with Darwin leading at 6.6% and Sydney recording the lowest at 3.1%.
As of September 2025, the national average gross rental yield sits between 3.7% and 5.0%, significantly higher than the five-year average of 3.56%. Units and apartments consistently outperform houses by 1-2 percentage points across all markets, while regional areas like Western Australia and Northern Territory deliver yields up to 8% for apartment investments.
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Australia's rental market shows strong regional variation, with Darwin and Perth offering the highest yields while Sydney and Melbourne provide lower but more stable returns.
Units consistently outperform houses across all markets, vacancy rates remain below 2% in most cities, and rental growth continues to outpace property price increases.
| City | Average Yield (All Properties) | Houses | Units/Apartments | Vacancy Rate |
|---|---|---|---|---|
| Darwin | 6.6% | 6.0% | 7.8-7.9% | 0.5% |
| Perth | 4.3% | 4.2% | 5.7-6.1% | 0.7% |
| Brisbane | 3.7% | 3.5% | 4.5-4.7% | 0.9% |
| Adelaide | 3.7% | 3.5% | 4.7% | 0.8% |
| Melbourne | 3.7% | 3.2% | 4.7-4.8% | 1.8% |
| Sydney | 3.1% | 2.7% | 4.1-4.6% | 1.5% |
| Hobart | 4.4% | 4.3% | 5.0% | 0.6% |
| Canberra | 4.1% | 3.8% | 5.0-5.2% | 1.5% |
What is the current average rental yield in Australia?
The national average gross rental yield in Australia ranges from 3.7% to 5.0% as of September 2025.
In Q1 2025, gross yields reached a peak of 5.04% nationally, reflecting rising rents that outpaced property price growth. This represents a significant improvement from the five-year average of 3.56%. The yield increases have been driven by rents growing faster than property prices, particularly for units and apartments across major metropolitan areas.
Current yields show substantial improvement compared to pre-pandemic levels in most markets. The Australian rental market has experienced strong rental growth of 5-8% year-on-year in major capitals, with this rental growth supporting higher gross yields for property investors. Units have experienced faster growth than houses, contributing to the overall yield improvement across the residential property market.
Regional markets consistently deliver higher yields than metropolitan areas, with some regional Western Australia and Northern Territory markets achieving yields above 6% for houses and up to 8% for apartment investments.
How does the yield vary across major cities and regional areas?
Darwin leads Australian cities with the highest rental yields at 6.6% for all dwellings, followed by Hobart at 4.4% and Perth at 4.3%.
Brisbane and Adelaide both deliver 3.7% average yields, while Melbourne matches this at 3.7%. Canberra provides 4.1% yields, positioning it in the middle range of capital city performance. Sydney records the lowest yields among major cities at 3.1%, reflecting its premium property prices relative to rental income.
Regional areas significantly outperform capital cities, with regional Western Australia and Northern Territory achieving yields up to 8.3% for units and 6.6% for houses. These higher regional yields reflect lower property acquisition costs combined with strong rental demand from essential workers, mining professionals, and agricultural workers.
The yield gap between regional and metropolitan markets typically ranges from 2-4 percentage points, making regional investment properties attractive for yield-focused investors. However, metropolitan markets offer greater liquidity, more stable tenant demand, and lower vacancy risk despite lower initial yields.
What's the breakdown of rental yields for houses, apartments, and townhouses?
Units and apartments consistently outperform houses by 1-2 percentage points across all Australian markets.
In Darwin, units achieve 7.8-7.9% yields compared to 6.0% for houses. Perth shows units delivering 5.7-6.1% versus 4.2% for houses. Brisbane units provide 4.5-4.7% yields while houses achieve 3.5%. Adelaide mirrors this pattern with 4.7% for units against 3.5% for houses.
Sydney demonstrates the largest yield gap, with units achieving 4.1-4.6% compared to just 2.7% for houses. Melbourne units deliver 4.7-4.8% versus 3.2% for houses. Canberra and Hobart also show consistent unit outperformance at 5.0-5.2% and 5.0% respectively, compared to houses at 3.8% and 4.3%.
Townhouses typically perform similarly to units, averaging around 4-5% yields depending on the market. The superior performance of units reflects their lower purchase prices relative to rental income, stronger demand from younger demographics, and more efficient rent-to-price ratios in high-density urban areas.
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How do property size and surface area affect rental returns?
Smaller properties including units, apartments, and townhouses generally deliver higher rental yields than larger houses across all Australian markets.
Properties with fewer bedrooms or smaller surface areas command higher rent per square meter, despite potentially higher purchase prices per square meter. This rental efficiency stems from strong demand from students, young professionals, and smaller households who prioritize location and affordability over space.
One-bedroom and two-bedroom apartments typically achieve the highest yields in metropolitan markets, particularly in inner and middle-ring suburbs with strong transport links. Three-bedroom units also perform well, offering a balance between yield and tenant appeal for small families and shared accommodation.
Larger houses with four or more bedrooms often produce lower yields due to higher purchase prices that aren't proportionally matched by rental income. However, large homes in family-oriented suburbs can attract stable long-term tenants, reducing vacancy risk and management costs despite lower gross yields.
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What is the typical purchase price of these properties including fees, taxes, and stamp duty?
The national median price for metropolitan houses sits at $838,000 as of August 2025, while units and apartments average $690,011.
| Property Type | Median Price | Stamp Duty (Estimate) | Total Acquisition Cost |
|---|---|---|---|
| Metropolitan House | $838,000 | $37,710 | $875,710 |
| Unit/Apartment | $690,011 | $31,050 | $721,061 |
| Townhouse | ~$350,000 (construction) | Varies by land | Plus land cost |
| New House Build | $395,000 (construction) | Varies by land | Plus land cost |
| Sydney Land (per lot) | $641,250 | $28,856 | $670,106 |
Stamp duty and acquisition fees typically add 4-5% to the purchase price, varying by state. For a $690,000 unit in Sydney, buyers face approximately $31,000-$34,500 in stamp duty and associated fees including legal costs and conveyancing.
Construction costs for new builds average $395,000 for houses and $350,000 for townhouses, excluding land acquisition. These costs vary significantly by location, with metropolitan areas commanding premium pricing for both labor and materials.
How much do ongoing costs like maintenance, property management, and insurance reduce the net yield?
Ongoing property costs typically reduce gross rental yields by 1-2 percentage points, significantly impacting net returns for investors.
Property management fees range from 5-12% of weekly rental income, with city properties generally incurring lower percentages (5-7%) compared to regional properties (8-12%). For a property generating $500 weekly rent, management fees cost $25-$60 per week or $1,300-$3,120 annually.
Annual maintenance costs average $1,500-$2,000 for mid-priced properties, covering routine repairs, garden maintenance, and periodic improvements. Older properties or those in harsh climates may require higher maintenance budgets of $2,500-$4,000 annually.
Landlord insurance typically costs $350-$500 annually, providing protection against rental defaults, property damage, and legal expenses. Combined with building insurance, total insurance costs can reach $800-$1,200 per year depending on property value and location.
Council rates, water charges, and other statutory costs add another $1,500-$3,000 annually. When combined, these ongoing costs can reduce a 4% gross yield to approximately 2-2.5% net yield, highlighting the importance of factoring all expenses into investment calculations.
How do different mortgage scenarios change the effective rental return?
Current investment loan rates sit at 5.6-6.0% variable, significantly impacting leveraged property returns compared to cash purchases.
Cash buyers maximize net yields by avoiding interest payments, with only ongoing costs reducing gross returns. A 4% gross yield property delivers approximately 2-2.5% net yield after expenses for cash buyers, representing the true property performance without leverage effects.
High loan-to-value ratio (LVR) borrowers face higher interest rates and increased repayment obligations that can eliminate positive cash flow. An 80% LVR loan at 6% interest on a $700,000 property requires $33,600 annual interest payments, often exceeding rental income after expenses.
Lower LVR loans (60-70%) provide better cash flow outcomes while still enabling property leverage. Interest-only loans can improve short-term cash flow but increase long-term financial risk during interest rate rises. Principal and interest loans build equity but require higher monthly payments that may create negative cash flow scenarios.
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What are the vacancy rates by city and property type, and how do they impact overall yields?
Australian vacancy rates remain exceptionally low across all major cities, sitting below 2% in most markets as of August 2025.
Darwin records the lowest vacancy rate at 0.5%, followed by Hobart at 0.6% and Perth at 0.7%. Adelaide maintains 0.8% vacancy while Brisbane sits at 0.9%. Sydney and Canberra both show 1.5% vacancy rates, while Melbourne records the highest at 1.8%, still well below concerning levels.
Units consistently show lower vacancy rates than houses across most capital cities due to strong demand from students, young professionals, and new immigrants. This demographic typically seeks affordable, well-located accommodation with good transport access, favoring apartment living over detached housing.
Low vacancy rates directly support rental yield performance by maximizing annual rental income. Properties in tight rental markets experience faster rent growth and reduced tenant turnover, minimizing lost rental days and re-letting costs. Markets with vacancy rates below 1% often see annual rent increases of 8-12%, significantly boosting yield performance.
Regional markets with strong employment drivers maintain even lower vacancy rates, particularly in mining and agricultural centers where accommodation options are limited relative to worker demand.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Who are the main renter profiles in different areas and how does this influence demand?
Major Australian cities attract diverse renter populations including international students, working professionals, immigrants, and families, creating strong and varied rental demand.
International students represent a significant rental demographic, particularly in Sydney, Melbourne, and Brisbane, driving demand for affordable units near universities and transport hubs. This demographic typically seeks one to two-bedroom apartments with good connectivity to educational institutions and part-time employment opportunities.
Working professionals, especially in their 20s and 30s, form the largest rental segment, seeking quality accommodation in inner and middle-ring suburbs. This group drives demand for modern apartments and townhouses with lifestyle amenities, work-from-home capabilities, and proximity to employment centers.
Recent immigrants and temporary visa holders create sustained rental demand across all property types, often starting with apartment living before transitioning to houses as families grow. Even high-income earners with $130,000+ salaries face rental affordability pressures, maintaining strong demand for moderately priced properties.
Regional areas primarily house essential workers, retirees seeking lifestyle changes, families, and specialized workers in agriculture, mining, and tourism. This demographic often requires longer-term accommodation, creating stable rental income for investors despite potentially lower yields than metropolitan areas.
What's the difference in profitability between short-term rentals (like Airbnb) and long-term leases?
Short-term rentals can potentially deliver 15-25% higher gross yields during peak periods but often produce similar or lower net returns after accounting for additional costs and management complexity.
Airbnb and short-term rental platforms charge commission fees of 15-20% of gross bookings, immediately reducing net income compared to long-term rentals. Additional costs include frequent cleaning, higher insurance premiums, furnishing and maintenance, and significantly more hands-on management time.
Short-term rentals experience high volatility outside tourist hotspots, with occupancy rates fluctuating dramatically based on seasons, events, and economic conditions. Properties in non-tourism areas may achieve only 40-60% occupancy, significantly reducing annual income compared to 95%+ occupancy typical of long-term rentals.
Long-term rentals provide stable, predictable income with lower management requirements and reduced operational costs. Tenant turnover costs are minimized, and landlords avoid the constant marketing, communication, and maintenance demands of short-term accommodation.
For most Australian markets outside premium tourism locations like Byron Bay or central Melbourne, long-term rentals deliver superior risk-adjusted returns with significantly less time investment and management complexity.
How have rental yields and rents changed compared to one year ago and five years ago?
National rental yields have increased from approximately 3.9% in 2023 to between 3.7-5.0% by September 2025, representing significant improvement in investor returns.
Compared to 2020 levels of around 3.7%, current yields show substantial recovery, with early 2024 peaks reaching 4.4% nationally. This improvement reflects rental growth outpacing property price increases, particularly benefiting unit and apartment investors across most markets.
Darwin demonstrates strong yield growth from 5.8% in 2019 to 6.3% in 2024 and 6.6% currently. Conversely, Melbourne experienced yield compression from 3.0% in 2019 to 2.8% in 2024 before recovering to current 3.7% levels.
Annual rent growth has consistently reached 5-8% year-on-year across major capitals, with units experiencing faster growth than houses. This rental growth has been supported by population growth, limited new supply, and persistently low vacancy rates below 2% in most markets.
The five-year trend shows Australian rental yields significantly outperforming the historical average of 3.56%, with current performance representing some of the strongest yield environments since the Global Financial Crisis period.
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What are the forecasts for yields and rents in one year, five years, and ten years, and how do they compare with other major global cities?
Australian property prices are forecast to grow 4-6% annually through 2030, with Sydney median house prices potentially reaching $1.79 million by 2030.
Rental yields are expected to remain stable or increase modestly between 4-6% depending on location and property mix through the next decade. This stability reflects continued rental demand supported by population growth, ongoing housing undersupply, and moderate interest rate environments.
Rental demand will be sustained by continued immigration, international student growth, and domestic population increases, particularly in major metropolitan areas. Housing undersupply relative to population growth supports both rental growth and yield stability across most Australian markets.
Australia's property price and rental yield growth averages 4.5% over five years, comparing favorably with the United States (4.2%) and New Zealand (4.4%). This performance exceeds the United Kingdom, Canada, and most European markets, positioning Australia as a competitive global real estate investment destination.
Regional Australian markets are expected to maintain their yield premium over metropolitan areas, with continued strong performance in mining, agricultural, and tourism-dependent economies. The yield differential between regional and metropolitan markets should persist, providing options for yield-focused investors seeking higher returns.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Australian rental yields currently favor units and apartments over houses, with regional markets significantly outperforming metropolitan areas.
The combination of rising rents, low vacancy rates, and stable property prices creates a favorable environment for rental property investors seeking both yield and capital growth potential.
Sources
- Wise - Best Rental Yield Australia
- Star Investment - Good ROI Rental Property Australia 2025
- Property Update - Australia Property Markets in Charts
- RealEstate.com.au - PropTrack Rental Report March 2024
- Australian Property Update - Rental Growth 2025
- Savings.com.au - Top Australian Suburbs for Rental Yield
- Your Mortgage - Median House Prices Australia
- Property Update - Rental Vacancy Rates
- JLL - Decoding Australia's Residential Market
- Property Update - Home Worth by 2030