Authored by the expert who managed and guided the team behind the Australia Property Pack
Yes, the analysis of Melbourne's property market is included in our pack
If you're looking to invest in Melbourne property, understanding rental yields is essential to making a smart decision.
This article breaks down the current gross and net rental yields across Melbourne's suburbs, property types, and neighborhoods so you know exactly what returns to expect.
We update this blog post regularly to reflect the latest Melbourne rental market data.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Melbourne.
Insights
- Melbourne's average gross rental yield sits at around 3.6% in early 2026, which is notably lower than many regional Australian markets but typical for a major capital city.
- Units and apartments in Melbourne generally yield between 4% and 5% gross, outperforming detached houses which typically sit in the 3% to 4% range.
- The gap between gross and net yields in Melbourne averages about 1.2 percentage points, largely due to land tax, strata fees, and management costs.
- Melbourne's vacancy rate hovers around 2.4%, meaning landlords can expect roughly 9 days of vacancy per year if pricing is competitive.
- High-yield suburbs like Sunshine, Werribee, and Broadmeadows often deliver 4% to 5% gross yields, but these come with trade-offs in capital growth potential.
- Prestige suburbs like Toorak, Brighton, and Hawthorn show compressed yields of 2% to 3% because property prices are driven more by owner-occupiers than rental demand.
- The Metro Tunnel integration in February 2026 is expected to boost renter demand around new stations like Arden, Parkville, and Anzac.
- Land tax in Victoria can dramatically reduce net yields for investors holding multiple properties or high site-value land, sometimes cutting returns by thousands annually.
- Property management in Melbourne typically costs 5% to 8% of rent collected, plus a letting fee of one to two weeks' rent for each new tenant.
What are the rental yields in Melbourne as of 2026?
What's the average gross rental yield in Melbourne as of 2026?
As of early 2026, the average gross rental yield for residential property in Melbourne sits at approximately 3.6%, which means an A$800,000 property would generate around A$28,800 per year in rent before any expenses.
Most typical Melbourne residential properties fall within a gross yield range of 3.5% to 3.7%, though individual properties can sit outside this band depending on location and property type.
Melbourne's gross yields are lower than many regional Australian markets and some other capital cities, reflecting the city's high property prices relative to rents.
The single biggest factor influencing Melbourne gross yields right now is the price-to-rent imbalance: property prices have grown faster than rents over the past decade, which keeps yields compressed across most of the metro area.
What's the average net rental yield in Melbourne as of 2026?
As of early 2026, the average net rental yield for Melbourne residential property is approximately 2.4%, though this can range from around 1.8% to 3.0% depending on your specific cost structure.
The typical gap between gross and net yields in Melbourne is about 1.2 percentage points, which accounts for management fees, maintenance, insurance, council rates, water charges, vacancy, and letting costs.
Land tax is often the single largest expense that eats into Melbourne investors' net yields, especially for those who own multiple properties or hold land with high site values under Victoria's tiered tax system.
Most standard Melbourne investment properties deliver net yields between 1.8% and 3.0%, with the wide range reflecting differences in land tax exposure, strata fees for apartments, and how efficiently owners manage vacancy and maintenance.
By the way, you will find much more detailed rent ranges in our property pack covering the real estate market in Melbourne.
We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
What yield is considered "good" in Melbourne in 2026?
In Melbourne's property market, a gross rental yield of 4.0% or higher is generally considered "good" by local investors, since it sits meaningfully above the city-wide average of around 3.6%.
The threshold that separates average-performing properties from high-performing ones in Melbourne is roughly 4.5% gross, which typically requires either a lower purchase price, a unit-heavy investment strategy, or an unusually strong rent-to-price ratio in your chosen suburb.
How much do yields vary by neighborhood in Melbourne as of 2026?
As of early 2026, Melbourne's gross rental yields range from around 2% in premium suburbs to approximately 5% in more affordable outer areas, creating a significant spread of about 3 percentage points across the metro region.
The highest-yield neighborhoods in Melbourne tend to be working-family suburbs in the west and north with lower entry prices but solid transport links, such as Sunshine, St Albans, Werribee, Tarneit, Broadmeadows, and Reservoir.
The lowest-yield neighborhoods are typically prestige and bayside suburbs where owner-occupiers drive up prices faster than rents can follow, including areas like Toorak, Hawthorn, Kew, Brighton, and Albert Park.
The main reason yields vary so dramatically across Melbourne neighborhoods is the disconnect between what people will pay to own a home (driven by lifestyle, schools, and prestige) versus what renters will pay for the same location.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Melbourne.
How much do yields vary by property type in Melbourne as of 2026?
As of early 2026, gross rental yields in Melbourne range from around 3% for detached houses up to approximately 5% for units and apartments, with townhouses falling somewhere in between.
Units and apartments currently deliver the highest average gross rental yields in Melbourne, typically ranging from 4% to 5%, because they have lower purchase prices relative to the rent they can command.
Detached houses deliver the lowest average gross rental yields in Melbourne, usually sitting between 3% and 4%, since buyers pay a premium for land that renters don't fully reflect in their rent payments.
The key reason yields differ between property types in Melbourne is simple: units cost less per bedroom than houses, so the rent-to-price math works out better even though weekly rents for houses are often higher in absolute terms.
By the way, you might want to read the following:
- What rental yields can you expect for a house in Melbourne?
- What rental yields can you expect for an apartment in Melbourne?
What's the typical vacancy rate in Melbourne as of 2026?
As of early 2026, the average residential vacancy rate in metropolitan Melbourne sits at approximately 2.4%, which translates to roughly 9 days of vacancy per year for a well-priced, well-presented property.
Vacancy rates across Melbourne neighborhoods range from under 1.5% in high-demand inner areas near universities and hospitals to over 3% in some outer suburbs or buildings with heavy supply.
The main factor driving Melbourne vacancy rates right now is the balance between new apartment supply in certain pockets and strong population growth fueling renter demand, especially around transport nodes and employment hubs.
Melbourne's 2.4% vacancy rate is relatively tight by historical standards and sits below the long-term average for Australian capital cities, indicating a landlord-friendly market in most areas.
Finally please note that you will have all the indicators you need in our property pack covering the real estate market in Melbourne.
What's the rent-to-price ratio in Melbourne as of 2026?
As of early 2026, the average rent-to-price ratio in Melbourne is approximately 0.30% per month, which means monthly rent equals about 0.30% of the property's purchase price (or 3.6% annually).
A rent-to-price ratio of 0.33% per month (4% annually) or higher is generally considered favorable for buy-to-let investors in Melbourne, and this ratio is essentially the same concept as gross rental yield expressed differently.
Melbourne's rent-to-price ratio is lower than many regional Australian cities and some other state capitals, reflecting the premium buyers pay for property in Australia's second-largest city compared to the rents the market will bear.
We have made this infographic to give you a quick and clear snapshot of the property market in Australia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
Which neighborhoods and micro-areas in Melbourne give the best yields as of 2026?
Where are the highest-yield areas in Melbourne as of 2026?
As of early 2026, the highest-yield neighborhoods in Melbourne include suburbs in the west like Sunshine, St Albans, and Werribee, northern areas like Broadmeadows and Reservoir, and growth corridors like Tarneit and Wyndham Vale.
These high-yield Melbourne suburbs typically deliver gross rental yields in the range of 4% to 5%, with some individual properties pushing above 5% depending on purchase price and rental performance.
The main characteristic these high-yield areas share is relatively affordable entry prices combined with solid renter demand from working families who value transport access, which creates a favorable rent-to-price ratio.
You'll find a much more detailed analysis of the areas with high profitability potential in our property pack covering the real estate market in Melbourne.
Where are the lowest-yield areas in Melbourne as of 2026?
As of early 2026, the lowest-yield neighborhoods in Melbourne are concentrated in prestige inner-east and bayside suburbs like Toorak, Hawthorn, Kew, Brighton, and Albert Park.
These low-yield Melbourne suburbs typically deliver gross rental yields in the range of 2% to 3%, which is significantly below the city-wide average of 3.6%.
The main reason yields are compressed in these areas is that property prices are driven primarily by owner-occupier demand for lifestyle, schools, and prestige, while rents don't rise proportionally because renters have price limits.
Buying a property in a low-yield area is one of the mistakes we cover in our list of risks and pitfalls people face when buying property in Melbourne.
Which areas have the lowest vacancy in Melbourne as of 2026?
As of early 2026, the Melbourne neighborhoods with the lowest residential vacancy rates include Parkville and Carlton (near the university and hospital precinct), Clayton (Monash University area), and parts of the inner north like Carlton North and North Melbourne.
These low-vacancy Melbourne areas typically see vacancy rates below 1.5%, meaning properties are rarely empty for more than a few days between tenants.
The main demand driver keeping vacancy low in these areas is proximity to major institutions like universities and hospitals, which create consistent year-round demand from students, staff, and healthcare workers.
The trade-off investors typically face when targeting these low-vacancy areas is that strong demand often pushes up purchase prices, which can compress yields even though occupancy is excellent.
Which areas have the most renter demand in Melbourne right now?
The Melbourne neighborhoods experiencing the strongest renter demand in early 2026 include inner suburbs like South Yarra, Richmond, Brunswick, and Fitzroy, plus university-adjacent areas like Parkville and Clayton.
The typical renter profile driving demand in these areas includes young professionals seeking walkable lifestyles near jobs and nightlife, plus students and university staff who need convenient access to campuses.
Rental listings in these high-demand Melbourne neighborhoods often get filled within one to two weeks of being advertised, and well-priced properties in good condition can attract multiple applications within days.
If you want to optimize your cashflow, you can read our complete guide on how to buy and rent out in Melbourne.
Which upcoming projects could boost rents and rental yields in Melbourne as of 2026?
As of early 2026, the top three infrastructure projects expected to boost Melbourne rents are the Metro Tunnel (integrating into the network on February 1, 2026), the Suburban Rail Loop East (tunnelling ramping up in 2026), and the Fishermans Bend urban renewal precinct.
The Melbourne neighborhoods most likely to benefit from these projects include Arden, Parkville, and North Melbourne (Metro Tunnel stations), Cheltenham, Clayton, Glen Waverley, and Box Hill (SRL East corridor), and Port Melbourne and South Melbourne (Fishermans Bend adjacent).
Investors might realistically expect rent increases of 5% to 15% in station-adjacent pockets once these projects are completed, though the timing varies from immediate (Metro Tunnel) to longer-term (SRL East and Fishermans Bend).
You'll find our latest property market analysis about Melbourne here.
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What property type should I buy for renting in Melbourne as of 2026?
Between studios and larger units in Melbourne, which performs best in 2026?
As of early 2026, one-bedroom and two-bedroom units generally outperform studios in Melbourne when you consider both rental yield and occupancy, because they attract a broader tenant pool with lower vacancy risk.
Studios in Melbourne can achieve gross yields of 4.5% to 5.5% (around A$18,000 to A$22,000 per year, or US$11,500 to US$14,000 / EUR 10,500 to EUR 12,800), while one-bedroom units typically yield 4% to 5% (around A$20,000 to A$28,000 per year, or US$12,800 to US$18,000 / EUR 11,700 to EUR 16,400).
The main factor explaining why larger units outperform is tenant demand: singles, couples, students, and sharers all compete for one-bedroom and two-bedroom units, while studios appeal to a narrower audience and can sit vacant longer.
Studios can still be the better investment choice in Melbourne's CBD or near universities like Parkville and Clayton, where high concentrations of single students and young professionals create reliable demand for compact living spaces.
What property types are in most demand in Melbourne as of 2026?
As of early 2026, well-located one-bedroom and two-bedroom apartments in Melbourne's inner ring are the most in-demand property type among renters, closely followed by three-bedroom houses and townhouses in the middle ring for family tenants.
The top three property types ranked by current tenant demand in Melbourne are: first, one-to-two bedroom apartments near jobs and transport; second, three-bedroom family homes in good school zones; and third, townhouses offering a middle ground between space and affordability.
The primary demographic trend driving this demand pattern is Melbourne's mix of young professionals seeking inner-city convenience and families needing more space in the middle suburbs, both prioritizing transport access.
Large luxury apartments (three-plus bedrooms with premium finishes) are currently underperforming in demand and likely to remain so, because renters at that budget often prefer houses, and the tenant pool for expensive apartments is thin.
What unit size has the best yield per m² in Melbourne as of 2026?
As of early 2026, the unit size range that delivers the best gross rental yield per square meter in Melbourne is typically 45 to 65 square meters, which covers compact one-bedroom and efficient two-bedroom apartments.
The typical gross rental yield per square meter for this optimal unit size in Melbourne is around A$380 to A$480 per m² annually (approximately US$245 to US$310 / EUR 220 to EUR 280 per m²), depending on location and building quality.
Smaller studios can underperform on yield per square meter because vacancy risk and management intensity don't scale down with size, while larger units underperform because renters don't pay proportionally more for extra space they may not fully use.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in Melbourne.
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.
What costs cut my net yield in Melbourne as of 2026?
What are typical property taxes and recurring local fees in Melbourne as of 2026?
As of early 2026, the annual property tax burden for a typical Melbourne rental apartment depends heavily on your total taxable land holdings, with land tax potentially ranging from A$0 (below threshold) to several thousand dollars (around US$1,900 to US$3,200 / EUR 1,750 to EUR 2,900) for investors with higher-value portfolios.
Other recurring local fees Melbourne landlords must budget for include council rates, which typically range from A$1,500 to A$3,000 per year (around US$960 to US$1,920 / EUR 875 to EUR 1,750) depending on the council area and property value, plus water service and sewerage charges.
Combined, these taxes and fees typically represent 8% to 15% of gross rental income in Melbourne, with land tax being the variable that can push costs toward the higher end for investors with significant property holdings.
By the way, we cover all the hidden fees and taxes in our property pack covering the real estate market in Melbourne.
What insurance, maintenance, and annual repair costs should landlords budget in Melbourne right now?
Annual landlord insurance for a typical Melbourne rental property costs between A$400 and A$1,500 (around US$255 to US$960 / EUR 235 to EUR 875), depending on the coverage level, property type, and any additional protections like loss of rent cover.
The recommended annual maintenance and repair budget for Melbourne investment properties is around 0.5% to 1.0% of the property's value, or roughly 5% to 10% of annual rental income, with older homes trending toward the higher end.
The repair expense that most commonly catches Melbourne landlords off guard is hot water system replacement, which can cost A$1,500 to A$3,000 (around US$960 to US$1,920 / EUR 875 to EUR 1,750) and often fails without warning in older properties.
In total, Melbourne landlords should realistically budget A$3,000 to A$8,000 per year (around US$1,920 to US$5,100 / EUR 1,750 to EUR 4,650) for insurance, maintenance, and repairs combined, depending on property age and condition.
Which utilities do landlords typically pay, and what do they cost in Melbourne right now?
In Melbourne, tenants typically pay for electricity, gas usage, and water usage (if separately metered), while landlords are responsible for water service charges, sewerage, and drainage fees, which are fixed infrastructure costs rather than usage-based.
The estimated monthly cost for landlord-paid utilities in a typical Melbourne rental is around A$50 to A$100 (approximately US$32 to US$64 / EUR 29 to EUR 58), covering water service and sewerage charges that vary by water retailer and property type.
What does full-service property management cost, including leasing, in Melbourne as of 2026?
As of early 2026, full-service property management in Melbourne typically costs between 5% and 8% of rent collected, which works out to around A$1,560 to A$2,500 per year (approximately US$1,000 to US$1,600 / EUR 910 to EUR 1,460) for a property renting at A$600 per week.
On top of ongoing management, Melbourne property managers typically charge a letting or tenant-placement fee of one to two weeks' rent (around A$600 to A$1,200 / US$385 to US$770 / EUR 350 to EUR 700) each time they find a new tenant, plus sometimes additional marketing or advertising costs.
What's a realistic vacancy buffer in Melbourne as of 2026?
As of early 2026, Melbourne landlords should set aside approximately 3% to 5% of annual rental income as a vacancy buffer, with the higher end recommended for unit-heavy buildings or suburbs with newer supply competing for tenants.
The typical number of vacant weeks Melbourne landlords experience is around one to two weeks per year in well-located, competitively priced properties, though turnover between tenants can push this higher if you factor in cleaning, repairs, and re-leasing time.
Buying real estate in Melbourne can be risky
An increasing number of foreign investors are showing interest. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about Melbourne, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| Cotality (formerly CoreLogic) Housing Chart Pack | It's one of Australia's most-cited housing data providers, used widely by banks, media, and policymakers. | We used it to anchor Melbourne's baseline gross yield level for an all-dwellings view. We treated it as the primary yield benchmark and cross-checked it against other independent rental and price sources. |
| NAB Melbourne Property Market Insights | NAB is a major Australian bank and its research team publishes well-referenced market summaries. | We used it as a second validation source for gross rental yields and rent growth direction in Melbourne. We triangulated its yield figures with Cotality and vacancy data from other sources. |
| REIV Residential Rental Data | REIV is Victoria's peak real estate industry body and publishes long-running vacancy and rent metrics. | We used it to pin a credible typical vacancy rate for metro Melbourne. We also used its rent levels as an input to yield and vacancy-buffer calculations. |
| SQM Research Gross Rental Yield | SQM Research is an established Australian housing analytics firm, often cited for vacancy and rental indicators. | We used it to understand how yields vary across Melbourne suburbs and postcodes. We treated it as a distribution tool rather than the only source for the average. |
| ABS Residential Property Price Indexes | ABS is Australia's official statistics agency, so its housing price indexes are gold-standard public data. | We used it to ground the price side of the rent-to-price relationship with official measures. We used it to avoid relying only on private price estimates. |
| RBA Household Sector Chart Pack | The Reserve Bank of Australia is the central bank, and its chart packs consolidate high-quality macro housing indicators. | We used it for macro context that affects yields, including interest rates and household conditions. We used it to frame what's normal for Melbourne yields in early 2026 conditions. |
| Victorian State Revenue Office Land Tax Rates | It's the official tax authority for Victoria, so it's the primary source for land tax information. | We used it to quantify land tax bands that can materially cut net yield. We translated the brackets into what it means for a typical Melbourne investment property. |
| Victorian SRO Land Tax Calculator | It's the government's own calculator, designed for estimating real tax bills. | We used it to validate how land tax scales with site value and ownership type. We used it to explain why net yields vary a lot between owners with different land value exposure. |
| Victorian SRO Vacant Residential Land Tax Explainer | It's the official explanation of when VRLT applies and how it's assessed. | We used it to define vacancy risk beyond normal market vacancy. We also used it to highlight compliance risk that can surprise investors. |
| Consumer Affairs Victoria Utilities Guide | It's the Victorian government's consumer regulator for renting rules. | We used it to clarify which utilities landlords typically pay versus tenants in Victoria. We then converted those responsibilities into a simple landlord cost checklist. |
| City of Melbourne Rates Information | It's the official council website, so it's the cleanest reference for council rates. | We used it to anchor recurring local fees as a real, unavoidable cost line. We used it as the authoritative reference even though exact bills vary by property and council area. |
| City of Melbourne Budget Context | It's the council's own budget framing, which is what ultimately drives rates and charges. | We used it to support the idea that rates are a predictable annual cost tied to council budgets. We used it to justify using a range for rates rather than a single number. |
| Victoria's Big Build Metro Tunnel | It's the Victorian government's official major-project portal. | We used it to identify demand-boosting transport upgrades that can lift rents in specific corridors. We translated the project into which micro-areas might feel it most. |
| Metro Trains Metro Tunnel Information | Metro Trains is the operator and publishes operational changes and dates that affect commuting reality. | We used it to time-stamp the early 2026 step change in accessibility around new stations and lines. We used it to connect infrastructure timing to near-term rental demand pockets. |
| Victoria's Big Build SRL East | It's an official project source and includes station locations and planning intent. | We used it to identify mid-term renter-demand zones around the six SRL East stations. We used it to explain why station-adjacent rentals can outperform on occupancy. |
| Victorian Government Fishermans Bend Framework | It's an official precinct plan document for Australia's largest urban renewal area near the CBD. | We used it to pinpoint a real pipeline of future jobs and homes that can reshape tenant demand. We used it to name the precinct as a specific, Melbourne-unique watch area. |
| RACV Landlord Insurance | RACV is a major Victorian insurer with established landlord insurance products. | We used it to anchor realistic landlord insurance cost ranges for Melbourne properties. We referenced it to avoid understating this ongoing ownership expense. |
| Savings.com.au Victorian Rental Yield Data | It aggregates and cites CoreLogic data, providing accessible yield comparisons by property type. | We used it to validate the house-versus-unit yield split in Melbourne. We cross-referenced it with our primary yield sources to ensure consistency. |
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