Here is how to calculate rental yield: multiply the weekly rent by 52, divide by the property's price, and multiply by 100. That is gross yield. A $900,000 house renting for $610 a week has a gross yield of 3.5%. Net yield takes a year of holding costs off the rent before you divide, and on that same house it falls to about 2.0%.
The gap between those two numbers is where investors get caught. Cotality put the national gross yield at 3.85% at the end of September 2026, the highest since August 2019, with capital city dwellings ranging from 3.4% in Sydney to 6.5% in Darwin. Our rental yield calculator does the arithmetic in seconds. This guide covers what to feed it: every cost that belongs in net yield, a worked house and unit example, and why the highest yield on a listing page is often the weakest investment on it.
How to calculate rental yield: the two formulas
Rental yield, sometimes called property yield, is a property's annual rent expressed as a percentage of its value. There are two versions, and you need both.
Gross rental yield formula
Gross yield = (weekly rent × 52) ÷ property price × 100
A $600,000 unit renting for $580 a week earns $30,160 a year. Divide by $600,000 and multiply by 100: 5.03%.
Use 52 weeks, not four weeks a month. Four times twelve is 48 weeks, which drops nearly a month of rent and turns a true 5.0% yield into 4.6%. Gross yield is what listings and selling agents quote, because it is quick and it is the bigger number.
Net rental yield formula
Net yield = (annual rent, minus annual holding costs, minus vacancy) ÷ property price × 100
Net yield tells you whether the property carries itself. It strips out everything you pay to own and lease the place, but not your mortgage, because two buyers of the same property can have completely different loans.
Which price do you divide by?
For a property you are buying, divide by the purchase price. For one you already own, divide by today's value, because that is the capital you are choosing to leave in it. The most honest version, yield on cost, divides by the price plus stamp duty, legal fees and immediate repairs. It is always lower.
What goes into net rental yield (and what does not)
These are the costs that turn gross into net. Use real bills and quotes, not a brochure estimate.
- Council rates. Ask the vendor for the latest notice.
- Water service charges. Usage is often passed to the tenant, but the fixed charges usually stay with the owner.
- Strata or owners corporation levies. Admin and capital works levies on units and many townhouses, plus any special levy already voted.
- Landlord insurance. On a house you also insure the building. On a unit, the strata scheme insures the building and your policy is smaller.
- Property management. A percentage of rent collected plus GST, a letting fee each time a new tenant signs, and sometimes advertising and inspection fees.
- Repairs and maintenance. Hot water systems, ovens and fences fail on their own schedule. Older houses need a bigger allowance.
- Vacancy. Weeks between tenants earn nothing. Allow at least two weeks a year.
- Land tax. A state tax on the land value of investment property. Victoria's general threshold is just $50,000 of land value, so almost every investment property there pays it, while other states set theirs higher. Our state-by-state land tax guide has the numbers.
Three things stay out of net yield. Mortgage interest is a financing cost, not a property cost. Depreciation and tax deductions change your after-tax return, not the yield, and our guide to investment property tax deductions covers what you can claim. Capital growth is a separate return altogether.
Worked example: a house versus a unit
Say you are choosing between a $900,000 house renting for $610 a week and a $600,000 apartment renting for $580 a week, both in Melbourne. The figures are hypothetical but sit close to Cotality's Melbourne medians, where houses yield 3.5% and units 5.2%. Management is 6% plus GST of rent collected, with a one-week letting fee plus GST and two weeks of vacancy. Land tax uses Victoria's general rates on an assumed site value of $560,000 for the house and $140,000 for the unit's share of its block.
| Line item | House | Unit |
|---|---|---|
| Purchase price | $900,000 | $600,000 |
| Weekly rent | $610 | $580 |
| Annual rent (× 52) | $31,720 | $30,160 |
| Gross yield | 3.52% | 5.03% |
| Council rates | $2,100 | $1,500 |
| Water service charges | $750 | $700 |
| Owners corporation levies | nil | $4,200 |
| Landlord insurance | $1,900 | $550 |
| Management fee | $2,013 | $1,914 |
| Letting fee | $671 | $638 |
| Repairs and maintenance | $3,000 | $1,200 |
| Vacancy (two weeks) | $1,220 | $1,160 |
| Land tax (Victoria) | $2,130 | $975 |
| Total holding costs | $13,784 | $12,837 |
| Net rent | $17,936 | $17,323 |
| Net yield | 1.99% | 2.89% |
Costs swallow about 43% of the rent on both. The house drops 1.5 percentage points from gross to net and the unit drops 2.1, because its costs are almost as high in dollars as the house's, on a price a third lower.
Now add one realistic complication. The owners corporation votes a $15,000 special levy for balcony waterproofing, payable over three years. That is $5,000 a year, and the unit's net yield falls to 2.05%, level with the house. The headline gap between 3.5% and 5.0% has closed completely, and the house still owns its land. We covered why that matters in our analysis of houses versus units in 2026.
Net yield is not cash flow
Neither property pays for itself with a loan attached. Say you borrow 80% at 6.65% interest-only. RBA figures put the average new variable investor loan at 6.4% in July 2026, before the September rate rise. The house carries $47,880 of interest against $17,936 of net rent, a pre-tax shortfall of $29,944 a year, or about $576 a week. The unit's interest is $31,920 against $17,323, a shortfall of $14,597, about $281 a week.
To break even on those loan terms you need a net yield of 5.3%, which at this example's cost ratio means a gross yield of about 9.3%. Cotality notes that even with yields rising, opportunities for neutral to positive cash flow remain low. Run your own loan through the investment return calculator for the after-tax picture.
Rental yields by capital city, October 2026
These are Cotality's gross yields as at 30 September 2026, released 1 October 2026, with the change in dwelling values over the past decade alongside.
| Capital | Houses | Units | All dwellings | Dwelling values, past 10 years |
|---|---|---|---|---|
| Sydney | 3.0% | 4.4% | 3.4% | +39.5% |
| Melbourne | 3.5% | 5.2% | 4.1% | +24.3% |
| Brisbane | 3.4% | 4.2% | 3.5% | +105.3% |
| Adelaide | 3.5% | 4.5% | 3.6% | +104.3% |
| Perth | 3.9% | 5.2% | 4.0% | +97.6% |
| Hobart | 4.3% | 4.8% | 4.4% | +90.2% |
| Darwin | 6.0% | 7.5% | 6.5% | +33.8% |
| Canberra | 4.0% | 5.5% | 4.4% | +55.8% |
| Combined capitals | 3.4% | 4.7% | 3.7% | +53.3% |
| Combined regionals | 4.3% | 4.6% | 4.3% | +96.8% |
| National | 3.6% | 4.7% | 3.9% | +62.4% |
Units out-yield houses in every capital, by 1.7 percentage points in Melbourne. Land drives a house's price far more than its rent.
Vacancy matters as much as yield. The national vacancy rate rose to 2.0% in September from a record low of 1.5% in February 2026. Hobart sits highest at 3.0%, followed by Sydney at 2.3% and Brisbane and Perth at 2.1%, while Adelaide is tightest at 1.4%. Rents are still up 5.5% over the year nationally, though monthly growth in September was the smallest since May 2025.
Why a high gross yield can be a trap
Yields rise when prices fall. Sydney dwelling values fell 7.0% over the year to September and Melbourne's 6.2%, so part of the yield improvement there is simply the denominator shrinking. A rising yield on a falling asset is not a better investment.
High yield and low growth often travel together. Darwin has the highest yields of any capital, and its dwelling values rose 33.8% over ten years. Brisbane yields 3.5% and its values more than doubled over the same decade. A property yielding 3.5% that grows 6% a year returns 9.5% before costs. One yielding 6.5% that grows 2% returns 8.5%.
The costs scale differently. Older apartment blocks with lifts, pools and deferred maintenance can carry levies that consume a high gross yield entirely, as the special levy example shows. Read the strata report and three years of minutes before you trust the number, and if you are buying in New South Wales, our guide to the 2026 strata law reforms covers what changed for apartment owners.
The rent may not be achievable. A selling agent's rental appraisal is written to help sell the property. Achieved rents on comparable leases are what count.
The tax backstop is narrowing. From 1 July 2027, negative gearing for residential property is limited to new builds. Properties held at 7:30pm AEST on 12 May 2026 are exempt, but an established property bought after that cannot use rental losses to cut tax on your wages from 1 July 2027, so its own net yield carries more of the load. Our explainer on the negative gearing and CGT changes sets out who is grandfathered.
Rental yield versus capital growth
Yield is income you can spend, and growth is wealth you can borrow against or realise later. Accepting a low yield for growth works only while you can carry the shortfall from your wages, which is why higher rates and the 2027 tax change both push yield up the list.
The useful question is whether you can hold this property comfortably for ten years if growth is average and rates stay where they are. The yield tells you how much of the holding cost the tenant pays. The rest comes from you.
Checklist before you trust a yield figure
- Find the achieved rent on three or four comparable recent leases, not the appraisal range.
- Annualise it with 52 weeks.
- Get the council rates and water notices from the vendor.
- For a unit, read the strata report, levy schedule, capital works fund balance and three years of minutes.
- Look up the land value and work out land tax in that state, counting any other land you hold there.
- Get a real landlord insurance quote for the address.
- Budget vacancy using the local vacancy rate, and add a maintenance allowance that suits the building's age.
- Calculate net yield, then cash flow at today's interest rate with a buffer for further rises.
- Compare your result with the median yield for that property type in that city. If yours is far above it, find out why.
Frequently asked questions
What is a good rental yield in Australia?
Compare against the local median for that property type rather than a national rule. On Cotality's September 2026 figures, capital city houses averaged 3.4% gross and units 4.7%, while regional dwellings averaged 4.3%. A yield well above the local median usually has a reason priced into it.
How do you work out the rental yield on a house?
Multiply the weekly rent by 52, divide by the price and multiply by 100 for gross yield. For net yield, subtract council rates, water charges, insurance, management, maintenance, vacancy and land tax from the annual rent before dividing.
What is the difference between gross and net rental yield?
Gross yield uses rent and price only. Net yield deducts the costs of owning and leasing the property first. In our worked example, the house's 3.52% gross yield became 1.99% net, and the unit's fell from 5.03% to 2.89%.
Does net rental yield include mortgage interest?
No. Net yield measures the property's return regardless of how it is financed. Interest belongs in a cash flow calculation, which at current rates rarely comes out neutral or positive.
Which capital city has the highest rental yield?
Darwin, at 6.5% for all dwellings and 7.5% for units as at 30 September 2026. Sydney is lowest at 3.4%, with houses at 3.0%. Darwin's values have also grown less than every capital except Melbourne over ten years.
Where to from here
Run the property through the checklist, then put the real figures into the calculator. If net yield and cash flow still work at today's rates, the property is worth a closer look. If they only work on the gross figure, you have a marketing number.
Most of this you can do yourself with the vendor's documents and a spreadsheet. It gets harder interstate, where you do not know which streets lease quickly or which buildings are about to strike a levy. If you want someone on the ground, GoMatch matches your brief with buyer's agents who cover that area.
This is general information, not financial or tax advice. Figures change, so confirm them for your own situation before you buy.
Sources
- Cotality, "Home Value Index, October 2026" (index results as at 30 September 2026). Released 1 October 2026.
- State Revenue Office Victoria, "Land tax (current rates)". Accessed 6 October 2026.
- Reserve Bank of Australia, "Statistical Table F6: Housing Lending Rates". Published 7 September 2026.
- Reserve Bank of Australia, "Statement by the Monetary Policy Board: Monetary Policy Decision". 29 September 2026.
- Australian Taxation Office, "Tax reform: boosting home ownership, reforming negative gearing and capital gains tax". Last updated 29 June 2026.
