Authored by the expert who managed and guided the team behind the Australia Property Pack
Yes, the analysis of Sydney's property market is included in our pack
This article breaks down everything you need to know about renting out a residential property in Sydney as a foreign investor in 2026.
We cover the legal requirements, realistic yields, neighborhood performance, tenant expectations, and both long-term and short-term rental strategies.
We constantly update this blog post to reflect the latest data and regulations, so you always have fresh information.
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 Sydney.
Insights
- Sydney's gross rental yield of around 3.3% is one of the lowest among Australian capitals because property prices have outpaced rent growth, making cash flow a challenge for investors.
- Foreign investors face an effective ban on established dwellings from April 2025 to March 2027, funneling overseas buyers almost exclusively toward new or off-the-plan apartments in Sydney.
- NSW's surcharge land tax of 5% on foreign-owned property can reduce net yields by over a full percentage point annually, often surprising first-time Sydney investors.
- Sydney's vacancy rate of 1.8% in December 2025 translates to just 6 to 7 days of market vacancy per year, making tenant demand exceptionally strong.
- Furnished apartments in Sydney's CBD can command 15% to 25% higher rent, but around 80% of long-term tenants prefer unfurnished properties.
- Non-hosted short-term rentals in Greater Sydney are capped at 180 days per year, which can cut potential Airbnb income nearly in half compared to unrestricted markets.
- Sydney's average Airbnb nightly rate is around A$220 with 62% occupancy, generating roughly A$20,000 in annual revenue for a typical listing.
- Air conditioning alone can add A$100 to A$200 per month to Sydney rent, making it one of the highest-return upgrades for landlords.
- Parramatta, Harris Park, and the Inner South-West suburbs like Canterbury and Campsie offer Sydney's highest unit rental yields at 5% to 6%.
- Standard Sydney leases run 6 or 12 months fixed-term, and landlords must give 60 days notice before increasing rent with at least 12 months between increases.
Can I legally rent out a property in Sydney as a foreigner right now?
Can a foreigner own-and-rent a residential property in Sydney in 2026?
As of early 2026, foreign investors can legally own and rent out residential property in Sydney, but the Australian Government strictly limits what types of property non-residents are allowed to purchase in the first place.
The main ownership structure available to foreigners in Sydney is direct ownership through individual FIRB approval, though some investors also use Australian-registered companies or trusts, each with its own tax and compliance implications.
The single biggest restriction foreign buyers face in Sydney right now is that from 1 April 2025 to 31 March 2027, there is a blanket ban on purchasing established dwellings, meaning non-residents are generally limited to buying new, off-the-plan, or near-new properties that increase Australia's housing stock.
If you're not a local, you might want to read our guide to foreign property ownership in Sydney.
Do I need residency to rent out in Sydney right now?
You do not need Australian residency to be a landlord in Sydney, as non-resident foreign owners can legally collect rental income from approved properties while living overseas.
If you earn rental income in Australia, you will need to interact with the Australian Taxation Office and typically obtain a Tax File Number (TFN) so your income and deductions are properly reported.
While international transfers are technically permitted, Sydney property managers overwhelmingly prefer paying rent into an Australian bank account, so most foreign landlords open a local account for practical reasons.
Managing a rental property in Sydney entirely remotely is feasible because most foreign owners use licensed property managers who handle tenant screening, lease administration, bond lodgement, repairs, and compliance on their behalf.
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What rental strategy makes the most money in Sydney in 2026?
Is long-term renting more profitable than short-term in Sydney in 2026?
As of early 2026, long-term renting in Sydney typically delivers more stable and predictable income, while short-term renting can generate higher gross revenue but comes with more regulation, higher costs, and the 180-day cap for non-hosted properties in Greater Sydney.
A well-managed long-term rental apartment in Sydney might generate around A$38,000 to A$42,000 per year (US$25,000 to US$27,500 or EUR 23,000 to EUR 25,500), while a well-managed short-term rental in a prime location could bring in A$50,000 to A$70,000 (US$33,000 to US$46,000 or EUR 30,000 to EUR 42,000), though costs and compliance cut significantly into the short-term margin.
Short-term renting financially favors properties in Sydney's tourist-heavy and lifestyle-driven areas like Bondi, the CBD fringe, Darling Harbour, and harbourside suburbs where nightly rates are high and occupancy is strong year-round.
What's the average gross rental yield in Sydney in 2026?
As of early 2026, the average gross rental yield in Sydney is approximately 3.3% citywide, though this varies significantly between property types and suburbs.
The realistic gross rental yield range for most Sydney residential properties is 2.5% to 4.5%, with prestige harbourside areas at the low end and affordable outer suburbs at the higher end.
Units and apartments typically achieve the highest gross rental yields in Sydney at around 3.6% to 4.3%, compared to freestanding houses which average closer to 2.6% to 3.0% because house prices are disproportionately higher relative to achievable rents.
By the way, we have much more granular data about rental yields in our property pack about Sydney.
What's the realistic net rental yield after costs in Sydney in 2026?
As of early 2026, the average net rental yield in Sydney hovers around 2.3% once you subtract all recurring ownership costs from gross rent.
The realistic net rental yield range for most Sydney landlords is 1.9% to 3.4%, with units at the higher end and houses at the lower end due to proportionally higher purchase prices.
The three main cost categories that reduce gross yield to net yield in Sydney are strata levies (which can reach A$4,000 to A$10,000 per year for apartments), property management fees (typically 5% to 8% plus GST), and for foreign owners specifically, the NSW surcharge land tax of 5% which alone can consume over a full percentage point of yield.
You might want to check our latest analysis about gross and net rental yields in Sydney.
What monthly rent can I get in Sydney in 2026?
As of early 2026, typical monthly rents in Sydney are approximately A$2,600 (US$1,700 or EUR 1,550) for a studio, A$3,200 (US$2,100 or EUR 1,950) for a 1-bedroom, and A$3,500 (US$2,300 or EUR 2,150) for a 2-bedroom apartment.
A realistic entry-level monthly rent for a decent studio in Sydney ranges from A$2,000 to A$2,800 (US$1,300 to US$1,850 or EUR 1,200 to EUR 1,700), depending on suburb and condition.
A typical 1-bedroom apartment in Sydney rents for A$2,800 to A$3,600 per month (US$1,850 to US$2,350 or EUR 1,700 to EUR 2,200), with inner-city and Eastern Suburbs properties at the higher end.
A 2-bedroom apartment in Sydney typically commands A$3,200 to A$4,500 per month (US$2,100 to US$2,950 or EUR 1,950 to EUR 2,750), with premium harbor-view or beach-adjacent units pushing even higher.
If you want to know more about this topic, you can read our guide about rents and rental incomes in Sydney.
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 are the real numbers I should budget for renting out in Sydney in 2026?
What's the total "all-in" monthly cost to hold a rental in Sydney in 2026?
As of early 2026, the estimated total "all-in" monthly cost to hold and maintain a typical rental apartment in Sydney (excluding mortgage interest) is around A$800 to A$1,200 (US$520 to US$780 or EUR 490 to EUR 730).
A realistic low-to-high monthly cost range for most Sydney rental properties is A$650 to A$1,500 (US$425 to US$980 or EUR 400 to EUR 920), with the variation driven by strata levy size, council rates, and whether foreign surcharges apply.
For foreign owners in Sydney, the surcharge land tax (5% of unimproved land value annually) is often the largest single contributor to monthly holding costs, easily adding A$400 to A$800 per month for a typical inner-city apartment.
You want to go into more details? Check our list of property taxes and fees you have to pay when buying a property in Sydney.
What's the typical vacancy rate in Sydney in 2026?
As of early 2026, the typical vacancy rate for rental properties in Sydney is approximately 1.8%, which is well below the 3% benchmark considered a balanced market.
Landlords in Sydney should realistically budget for about 2 to 4 weeks of vacancy per year, because while market-wide vacancy translates to only about 6 to 7 days, individual turnover events happen in lumps when leases end.
The main factor causing vacancy rates to vary across Sydney neighborhoods is proximity to employment hubs, universities, and public transport, with inner-city and university-adjacent suburbs like Surry Hills and Kensington often running below 1% vacancy.
January to March typically sees the highest tenant turnover and vacancy in Sydney because lease cycles align with the new year, job relocations, and the start of university semesters for international students.
We have a whole part covering the best rental strategies in our pack about buying a property in Sydney.
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Where do rentals perform best in Sydney in 2026?
Which neighborhoods have the highest long-term demand in Sydney in 2026?
As of early 2026, the three neighborhoods with the highest overall long-term rental demand in Sydney are Surry Hills, Newtown, and Chatswood, driven by their combination of transport access, lifestyle amenities, and diverse tenant pools.
Families in Sydney have the strongest long-term rental demand in suburbs like Lane Cove, Lindfield, and Randwick, where quality school catchments, parks, and family-friendly amenities create consistent demand.
Students in Sydney cluster around Camperdown, Ultimo, and Kensington due to their proximity to the University of Sydney and UNSW, making these suburbs perennial favorites for the academic tenant pool.
Expats and international professionals in Sydney favor Bondi Junction, Neutral Bay, and Pyrmont because these suburbs offer walkable lifestyles, harbor or beach access, and easy CBD commutes that match their priorities.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Sydney.
Which neighborhoods have the best yield in Sydney in 2026?
As of early 2026, the three neighborhoods with the best rental yields in Sydney are Parramatta, Harris Park, and Canterbury, where unit rental yields regularly reach 5% to 6%.
The estimated gross rental yield range for these top-yielding Sydney neighborhoods is 4.5% to 6.5%, significantly above the citywide average of 3.3%.
The main characteristic allowing these neighborhoods to achieve higher yields is their combination of affordable purchase prices (often A$400,000 to A$600,000 for units) with solid rental demand from working professionals who cannot afford inner-city rents but need good transport connections.
We cover a lot of neighborhoods and provide a lot of updated data in our pack about real estate in Sydney.
Where do tenants pay the highest rents in Sydney in 2026?
As of early 2026, the three neighborhoods where tenants pay the highest rents in Sydney are Double Bay (around A$4,500 per month or US$2,950), Barangaroo (around A$4,200 per month or US$2,750), and Mosman (around A$4,000 per month or US$2,620).
The typical monthly rent range for a standard apartment in these premium Sydney neighborhoods is A$3,500 to A$5,500 (US$2,300 to US$3,600 or EUR 2,150 to EUR 3,360), with harbor-view penthouses and larger homes commanding even more.
The main characteristic making these neighborhoods command Sydney's highest rents is their combination of harbor or water views, walkability to elite dining and retail precincts, prestigious school catchments, and the scarcity of available stock in these tightly held areas.
The tenant profiles typically renting in these highest-rent Sydney neighborhoods are senior executives, business owners, medical specialists, international finance professionals, and high-net-worth expats seeking lifestyle and convenience over budget.
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Australia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
What do tenants actually want in Sydney in 2026?
What features increase rent the most in Sydney in 2026?
As of early 2026, the three property features that increase monthly rent the most in Sydney are air conditioning (essential for summer comfort), secure parking (especially in dense inner suburbs where street parking is scarce), and a balcony or private outdoor space (highly valued since COVID changed how people use their homes).
Air conditioning alone can add A$100 to A$200 per month (around 5% to 8%) to Sydney rent, making it the single most cost-effective upgrade for landlords targeting premium tenants.
One commonly overrated feature that Sydney landlords invest in but tenants do not pay much extra for is high-end kitchen benchtops or designer fixtures, because most renters prioritize functional layouts and storage over aesthetic finishes.
One affordable upgrade that provides a strong return on investment for Sydney landlords is installing a dishwasher, which typically costs A$500 to A$1,000 but can add A$50 to A$100 per month in rent and significantly speed up leasing.
Do furnished rentals rent faster in Sydney in 2026?
As of early 2026, furnished apartments in Sydney's CBD and inner suburbs typically lease 1 to 2 weeks faster than unfurnished equivalents because they attract international arrivals, corporate relocations, and students who need to move in immediately.
Furnished apartments in Sydney generally command a rent premium of 15% to 25% over unfurnished equivalents, translating to roughly A$400 to A$800 extra per month depending on location and quality of furnishings.
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How regulated is long-term renting in Sydney right now?
Can I freely set rent prices in Sydney right now?
Landlords in Sydney have full freedom to set the initial rent at market rates when signing a new tenant, with no government-imposed caps on what you can charge at the start of a lease.
Rent increases during a tenancy in Sydney are regulated by timing rather than amount, meaning you must give at least 60 days written notice and can only increase rent once every 12 months, but there is no fixed percentage cap on how much you can raise it.
What's the standard lease length in Sydney right now?
The standard lease length for residential rentals in Sydney is 6 or 12 months fixed-term, after which the lease typically rolls over to a periodic (month-to-month) arrangement unless renewed.
The maximum security deposit (called a rental bond in NSW) that a landlord can legally require in Sydney is 4 weeks of rent for properties renting at A$700 per week or less, and negotiable for higher-rent properties, which works out to roughly A$2,800 to A$4,000 (US$1,800 to US$2,600 or EUR 1,700 to EUR 2,450) for a typical apartment.
The rules for returning the security deposit in Sydney require the landlord or agent to complete a final inspection, agree on any deductions for damage or unpaid rent, and lodge a bond release claim with NSW Fair Trading, with the balance typically returned within 5 to 7 business days once both parties sign off.
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.
How does short-term renting really work in Sydney in 2026?
Is Airbnb legal in Sydney right now?
Airbnb-style short-term rentals are legal in Sydney under the NSW Short-Term Rental Accommodation (STRA) framework, provided hosts comply with registration, planning rules, and the mandatory Code of Conduct.
To operate a short-term rental in Sydney, you must register your property on the NSW Planning Portal via Service NSW before advertising, and this registration number must appear on all listings.
In Greater Sydney, non-hosted short-term rentals are capped at 180 days per year, while hosted rentals (where you live on-site during guest stays) have no annual night limit.
The most common penalty for operating a non-compliant short-term rental in Sydney includes fines of up to A$22,000 for individuals, and hosts can be added to an exclusion register that permanently bans them from the STRA industry.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in Sydney.
What's the average short-term occupancy in Sydney in 2026?
As of early 2026, the average annual occupancy rate for short-term rentals in Sydney is approximately 62%, meaning a typical property is booked for about 225 nights per year.
The realistic occupancy range for most Sydney short-term rentals is 45% to 78%, with professionally managed CBD and beach properties at the higher end and suburban listings at the lower end.
October through January typically sees the highest occupancy rates for Sydney short-term rentals because this period covers spring events, the summer holiday season, New Year's Eve celebrations, and the Australian Open tennis lead-up.
June through August typically sees the lowest occupancy rates for Sydney short-term rentals because winter is the city's slowest tourism period and many potential guests choose warmer destinations.
Finally, please note that you can find much more granular data about this topic in our property pack about Sydney.
What's the average nightly rate in Sydney in 2026?
As of early 2026, the average nightly rate for short-term rentals in Sydney is approximately A$220 (US$145 or EUR 135), though this varies widely by property type and location.
The realistic nightly rate range for most Sydney short-term rental listings is A$120 to A$460 (US$80 to US$300 or EUR 75 to EUR 280), with budget listings and suburban apartments at the low end and premium harbor-view properties at the top.
The typical nightly rate difference between peak season (December-January) and off-season (June-August) in Sydney is around A$50 to A$100 (US$33 to US$65 or EUR 30 to EUR 60) per night, representing a 25% to 40% swing for most listings.
Is short-term rental supply saturated in Sydney in 2026?
As of early 2026, the Sydney short-term rental market is moderately saturated with over 28,000 active listings, meaning new hosts face meaningful competition and must differentiate on quality, location, or price.
Active short-term rental listings in Sydney have grown by approximately 8% over the past year, indicating the market is still expanding and competition is intensifying.
The neighborhoods in Sydney most oversaturated with short-term rentals are Bondi Beach, the CBD, and Darling Harbour, where listing density is high and occupancy has been squeezed by the sheer volume of competing properties.
The neighborhoods in Sydney that still have room for new short-term rental supply include outer beach suburbs like Cronulla, emerging Western Sydney hubs near new infrastructure, and family-friendly areas near hospitals like Westmead that serve visiting relatives and medical tourists.
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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 Sydney, 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 |
|---|---|---|
| FIRB Guidance Note 1 | The Australian Government's official guide on what foreign buyers can purchase. | We used it to explain what property types foreigners can buy and under what conditions. We used it to frame the "you can rent out, but what you can buy is the constraint" story. |
| ATO Foreign Residential Investor Fees | The ATO publishes official fee schedules and key rules for foreign approvals. | We used it to quote current approval fee bands and the established-dwelling ban window. We used it to turn the rule into a practical budgeting item for investors. |
| Revenue NSW Surcharge Purchaser Duty | Revenue NSW is the official tax authority for NSW transfer duties. | We used it to cite the foreign buyer surcharge rate of 9%. We used it to show how Sydney's foreign investor costs jump even before collecting rent. |
| Revenue NSW Surcharge Land Tax | The NSW Government's official explanation of the foreign-owner annual surcharge. | We used it to explain the 5% surcharge as an ongoing annual cost tied to land value. We used it to warn yield-focused investors about this major hidden cost. |
| SQM Research Property Index | A widely cited Australian research house with transparent methodology. | We used it to build citywide rent and price benchmarks for early 2026. We used it to compute rental yield estimates consistently from one data family. |
| SQM Research Vacancy Rates | SQM publishes transparent vacancy methodology used industry-wide. | We used it to cite Sydney's December 2025 vacancy rate of 1.8%. We used it as the anchor for vacancy budgeting advice. |
| AirDNA Sydney Market Overview | One of the most used global STR datasets covering Airbnb and Vrbo. | We used it to estimate occupancy, ADR, and listing counts for Sydney STR. We used it to assess whether supply looks crowded and what that means for returns. |
| NSW Planning STRA Framework | The NSW planning framework that governs short-term rentals statewide. | We used it to explain what makes Airbnb-style renting legal in NSW. We used it to highlight the 180-day cap and compliance requirements. |
| NSW Government Rent Increases | The NSW Government's plain-English guidance on rent increase rules. | We used it to state the 60-day notice rule and 12-month minimum between increases. We used it to describe what landlords can and cannot do to push rents up. |
| ATO Rental Properties Guide 2025 | The ATO's practical guide to rental income, deductions, and record-keeping. | We used it to define what costs are typically deductible versus capitalized. We used it to inform the realistic net yield section in a compliant way. |
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.
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