The Numbers
According to the latest CoreLogic data, gross rental yields across Sydney have risen to 3.8% for houses and 4.9% for units, while Melbourne sits at 4.1% and 5.3% respectively. These are the highest levels since mid-2021.
What's Driving the Increase?
Three main factors are converging:
- Record migration: Australia's net overseas migration exceeded 500,000 in the past year, creating unprecedented demand for rental housing
- Supply shortage: New dwelling approvals remain well below the government's target of 240,000 per year, with only ~170,000 approved in the last 12 months
- Rent growth: National rents have grown 8.2% year-on-year, outpacing property price growth of 5.4%
Regional Highlights
| City | House Yield | Unit Yield | YoY Rent Growth |
|---|---|---|---|
| Sydney | 3.8% | 4.9% | +7.8% |
| Melbourne | 4.1% | 5.3% | +9.1% |
| Brisbane | 4.5% | 5.6% | +8.4% |
| Perth | 5.0% | 6.1% | +11.2% |
| Adelaide | 4.7% | 5.8% | +9.8% |
What It Means for Investors
Higher yields improve cash flow, which is particularly important in a high-interest-rate environment. Properties that were negatively geared a year ago may now be neutral or even positively geared.
If your rental income has increased significantly, make sure you're tracking it accurately. Tools that reconcile your bank statements automatically can save hours of manual data entry.
The outlook for the next 12 months remains favourable for landlords, with vacancy rates expected to stay below 2% nationally. However, some state governments are considering rent caps, so stay informed about legislative changes in your state.