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Rental Yield Calculator

Work out gross and net yield on any investment property. Know the numbers before you make an offer.

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Rental yields in Australia — why are they so low?

Rental yield measures how much annual income a property generates relative to its value. A $1 million property renting for $600 per week generates $31,200 per year — a gross yield of 3.1%. That's not a lot.

Sydney and Melbourne consistently rank among the lowest-yielding major cities in the world, often sitting at 2–3% gross yield. Compare that to many European cities (4–6%) or US cities (5–8%). The reason? Australian property prices have grown faster than rents for decades, compressing yields.

This matters because a 2–3% yield on a highly leveraged property means you're almost certainly negatively geared — the rental income doesn't cover the mortgage, rates, insurance, and management fees. The entire investment thesis rests on capital growth continuing.

🦘 Fun fact: Australia has one of the highest rates of property investment in the world — about 20% of taxpayers own an investment property. Most are negatively geared, meaning the ATO effectively subsidises part of the cost through tax deductions.

Frequently asked questions

What is a good rental yield in Australia?

A gross rental yield of 4–6% is generally considered solid in Australia. Below 3% means the property's value is driven primarily by capital growth expectations. Inner Sydney and Melbourne typically yield 2–3.5% gross; Perth, Darwin, and regional cities often yield 5–7%+. Net yield (after expenses) is typically 1.5–2 percentage points below gross.

What is the difference between gross and net rental yield?

Gross yield = (annual rent ÷ property value) × 100. It's the headline number but ignores all costs.

Net yield = ((annual rent − annual expenses) ÷ property value) × 100. Expenses include council rates, landlord insurance, property management (7–10% of rent), maintenance, and vacancy. Net yield is typically 1.5–2 percentage points below gross — so a 5% gross yield becomes roughly 3–3.5% net.

Is 5% rental yield good in Australia?

Yes — 5% gross is above average for Australian capital cities. After expenses (~1.5–2% reduction), your net yield is around 3–3.5%. At current mortgage rates (~6%), the property is likely negatively geared (rental income doesn't cover interest). However, with depreciation deductions, a 5% gross yield property can be close to cash-flow neutral after tax. In regional and higher-yield markets, 5% is achievable while maintaining strong capital growth prospects.

Which Australian cities have the best rental yields?

As of 2026: Perth and Darwin lead with 5–6% gross; Brisbane and Adelaide average 4–5%; Sydney and Melbourne are lowest at 2.5–3.5% gross. Regional cities and mining towns can hit 6–9%+ but carry higher vacancy risk. Higher-yield areas often have lower capital growth, so total returns (yield + growth) tend to be more comparable across markets than headline yields suggest.

What is negative gearing and how does it affect rental yield?

Negative gearing occurs when rental income is less than your loan interest and expenses — the property makes a loss on paper. In Australia, this loss can be deducted from your salary income, reducing your tax bill. A 37% taxpayer recovers 37 cents of every dollar of loss from the ATO. Most Sydney and Melbourne investment properties are negatively geared at current prices, making the investment thesis reliant on capital growth to produce a positive total return.