Rental yield is the annual rental income a property earns, expressed as a percentage of what the property is worth. The quick version of the formula is gross yield = (annual rent / property value) x 100, so a place renting for $560 a week on a $680,000 value sits at roughly 4.3 per cent.
That single number does a lot of heavy lifting. It is the closest thing property has to an interest rate, a way to compare a unit in Footscray against a house in Toowoomba without getting lost in postcodes and floor plans. Below we walk through the gross and net versions, what counts as a normal figure in Australia, and the trade-off that quietly shapes every investor’s strategy.
What rental yield actually measures
Think of yield as the income engine of a property, separate from any change in its value over time. Capital growth is the bonus you might collect when you sell. Yield is the rent landing in your account every week while you hold.
Both matter, and they do not always move together, which is the whole reason investors pay attention to yield in the first place. A property can be a brilliant grower and a mediocre earner, or the reverse. Knowing the yield tells you which kind you are looking at before you fall in love with the kitchen.
Gross rental yield, the back-of-the-envelope version
Gross yield is the figure you will see splashed across listings and agent spiels, because it is flattering and easy to work out. You take the annual rent and divide it by the property value, then multiply by 100.
Say a property rents for $600 a week. Multiply by 52 and you get $31,200 a year. If the property is worth $700,000, the sum is ($31,200 / $700,000) x 100, which lands at about 4.5 per cent.
It is a useful first filter and a terrible final answer, because it ignores every cost of actually owning the thing. Gross yield is the sticker price. Net yield is what you pay at the register.
Net rental yield, the version that pays your bills
Net yield strips out the running costs before it does the division, so it reflects what the property genuinely returns to you. The shape of the formula is the same, you just subtract expenses from the rent first.
The costs that usually come off the top include:
- Property management fees, often a percentage of rent
- Council rates and water charges
- Building and landlord insurance
- Repairs and ongoing maintenance
- Strata or body corporate fees, if it is an apartment or townhouse
So a property collecting $31,200 in rent but bleeding $8,000 a year in costs is really returning $23,200. On that same $700,000 value, net yield drops to about 3.3 per cent. The gap between 4.5 and 3.3 is not rounding. It is the difference between the story and the spreadsheet, and strata-heavy apartments tend to show the widest gap of all.
Gross yield sells the property. Net yield tells you whether to buy it.
A quick housekeeping note before you bank any of these numbers. This is general information, not personal financial advice, and it does not account for your tax position, borrowing costs or goals. A mortgage broker, accountant or licensed adviser can run your actual situation, and a property’s past returns never promise its future ones.
A worked example you can copy
Numbers tend to stick better than formulas, so here is a full run-through using realistic figures. Imagine a property renting for $560 a week with a value of $680,000.
| Step | Working | Result |
|---|---|---|
| Weekly rent | Given | $560 |
| Annual rent | $560 x 52 | $29,120 |
| Gross yield | ($29,120 / $680,000) x 100 | about 4.3% |
| Annual costs | Management, rates, insurance, maintenance | about $7,500 |
| Net rent | $29,120 minus $7,500 | $21,620 |
| Net yield | ($21,620 / $680,000) x 100 | about 3.2% |
Same property, two very different stories depending on which line you quote. When an agent leads with the gross figure, that is fair enough, but do the net sum yourself before you sign anything. A free online tool such as a rental yield calculator can do the arithmetic in seconds, though it is worth plugging in your own cost estimates rather than the optimistic defaults.
What counts as a good yield in Australia
There is no single magic number, and anyone who quotes you one is selling something. As a rough guide, last checked June 2026, a typical gross residential yield across Australia often sits somewhere around 3 to 5 per cent. These figures move with interest rates, rents and prices, so treat them as a ballpark rather than gospel and check current local data before you commit.
The spread is wide and it is geographic. Expensive, blue-chip capital-city suburbs frequently come in at the lower end, sometimes below 3 per cent, because prices have run so far ahead of rents. Some regional towns and unit markets push higher, occasionally past 5 or 6 per cent, because values are more modest relative to the rent. A glossy inner-Sydney house and a tidy regional unit can sit at opposite ends of that range while looking equally sensible on paper.
The yield versus growth trade-off
Here is the tension that sits underneath all of this. Yield and capital growth tend to pull in opposite directions, and understanding why saves a lot of disappointment.
In sought-after growth suburbs, buyers bid prices up faster than rents can follow. That suppresses the yield even as the property value climbs nicely. In higher-yield areas, the strong rent relative to price often comes with slower long-term growth. You are usually choosing which lever to favour, not pulling both at once.
Neither path is wrong. The right balance depends on your strategy and your cash flow. If you need the rent to cover the mortgage, a higher yield earns its keep. If you can carry the holding costs and you are betting on the long game, you might happily accept a skinny yield for stronger growth, which is the logic behind a lot of negative gearing decisions. There is also the rentvesting approach, where people rent where they want to live and buy a higher-yielding property somewhere they can afford, deliberately chasing income over a postcode.
A few traps worth dodging
A handful of mistakes turn up again and again when people calculate yield.
The first is leaning on the gross figure alone, which we have flogged enough already but it bears repeating. The second is using an out-of-date or wishful property value, which flatters the yield on paper while doing nothing for your actual return. The third is forgetting vacancy, those weeks between tenants when the rent stops but the rates and insurance very much do not. Even a fortnight empty each year shaves a real slice off your net figure.
And remember that yield is one lens, not the whole optometrist. A strong number on a poorly located property with no growth prospects is a trap dressed up as a bargain.
The bottom line
Rental yield is the annual rent as a percentage of the property’s value, and the gross formula is simply (annual rent / property value) x 100. Net yield, the one that matters, subtracts your running costs before doing the same sum, and it is almost always lower than the headline.
Across Australia, gross yields often sit roughly in the 3 to 5 per cent range as of June 2026, lower in pricey growth suburbs and higher in some regional and unit markets. Weigh yield against capital growth, run the net numbers yourself, and treat any quoted figure as a starting point rather than a promise. If you are building a broader plan, our guide to how to buy an investment property picks up where this leaves off.