This article is general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation.
Key takeaways
- Gross rental yield is (annual rent / property value) x 100. Net yield subtracts your annual expenses from the rent before dividing.
- As of March 2026, gross yields for houses range from 2.80% in Sydney to 5.01% in Darwin. Units yield higher across every capital city.
- Net yield is the number that actually matters for your cash flow. Two properties with the same gross yield can look very different once you account for real costs.
- A "good" yield depends on your strategy. Higher yields often come with lower capital growth, and lower yields in expensive cities may deliver stronger long-term gains.
- Common mistakes include using gross yield to make investment decisions, ignoring vacancy costs, and forgetting about strata and land tax.
Rental yield is one of those numbers that gets thrown around constantly in property circles, but plenty of landlords have never actually sat down and calculated it for their own property. Or they have looked at a gross figure on a listing and assumed that was the full picture.
It is not. There is a meaningful gap between gross and net yield, and understanding both is the difference between knowing your property looks good on paper and knowing whether it is actually putting money in your pocket.
The Gross Rental Yield Formula
Gross yield is the simplest version of the calculation. You only need two numbers: annual rent and property value.
Gross rental yield = (annual rental income / property value) x 100
Take a property worth $650,000 that rents for $550 per week. The annual rent is $550 x 52 = $28,600. Divide that by $650,000 and multiply by 100. The gross yield is 4.4%.
That is the number you see in property listings and suburb comparison reports. It is useful for a quick comparison, but it tells you nothing about costs.
The Net Rental Yield Formula
Net yield is where the real picture starts to form. It accounts for the ongoing expenses of holding the property.
Net rental yield = ((annual rental income - annual expenses) / property value) x 100
Using the same $650,000 property earning $28,600 a year, let's add in realistic expenses:
- Council rates: $1,800
- Water rates: $1,000
- Landlord insurance: $1,400
- Building insurance: $1,800
- Repairs and maintenance: $3,000
- Vacancy allowance (2 weeks): $1,100
- Land tax: $800
Total expenses: $10,900
Net income = $28,600 - $10,900 = $17,700
Net yield = ($17,700 / $650,000) x 100 = 2.7%
That 4.4% gross yield just became 2.7% net. The gap is real, and if you are making investment decisions based on gross yield alone, you are working with incomplete information. For a detailed look at what goes into that expense column, our guide to the cost of owning a rental property breaks it down line by line.
Calculate Your Rental Yield
Plug in your property value, weekly rent, and annual expenses below to see both gross and net yield instantly.
Enter your purchase price and weekly rent to calculate rental yield.
What Expenses to Include in Net Yield
A proper net yield calculation should include every recurring cost of holding the property:
- Council and water rates vary by council area but typically run $2,500 to $4,000 combined in capital cities
- Insurance covers both building and landlord policies, usually $2,500 to $4,000 a year
- Repairs and maintenance averaged out over time (budget 1% to 2% of property value annually)
- Strata or body corporate levies for units and apartments, which can add $3,000 to $8,000 a year
- Land tax depending on your state and total land holdings. Use the land tax calculator to check your liability by state.
- Property management fees if you use an agent (typically 5% to 10% of rent)
- Vacancy allowance to account for gaps between tenants
Mortgage interest is deliberately excluded. Your loan structure depends on your deposit, lender, and personal finances, not the property itself. Excluding it makes net yield comparable across properties regardless of how they are financed. For a full list of what you can and cannot claim on these expenses, see landlord expenses you can claim at tax time.
City-by-City Yield Benchmarks (March 2026)
Gross rental yields vary significantly depending on which city you are in and whether you own a house or a unit. Here are the latest figures from SQM Research as of March 2026.
Houses (all types):
| City | Gross Yield |
|---|---|
| Darwin | 5.01% |
| Perth | 3.60% |
| Hobart | 3.50% |
| Canberra | 3.20% |
| Adelaide | 3.18% |
| Melbourne | 3.10% |
| Brisbane | 2.93% |
| Sydney | 2.80% |
Units (all types):
| City | Gross Yield |
|---|---|
| Darwin | 6.67% |
| Hobart | 5.82% |
| Canberra | 5.05% |
| Melbourne | 4.53% |
| Adelaide | 4.49% |
| Perth | 4.37% |
| Sydney | 4.24% |
| Brisbane | 3.69% |
A few things stand out. Units yield more than houses in every single capital city, often by 1.5 to 2 percentage points. Darwin is in a league of its own for yield, though it comes with a smaller market and different risk profile. Sydney and Brisbane sit at the bottom for houses, largely because property prices have risen faster than rents.
Perth, which was a yield standout in 2023 and 2024, has seen yields compress as property prices caught up with the rent growth that drove those earlier returns. Adelaide tells a similar story. Both cities still offer solid returns, but the peak yield window has narrowed.
When Yield Matters and When It Does Not
Rental yield is one metric, not the only metric. How much weight you give it depends on what you are trying to achieve.
If you need positive cash flow, yield is critical. A property with a low net yield and a large mortgage will cost you money every month, and you will need to fund that shortfall from your salary or other income. If you are already stretched, a higher-yielding property in a less expensive market might be the better choice. You can model this with the cash flow calculator to see exactly where a property lands after mortgage costs. For more on how negative cash flow works in practice, see our guide to negative gearing explained.
If you are building long-term wealth, a lower yield in a high-growth area can still be the right call. A property yielding 2.8% in Sydney may deliver stronger total returns over a decade than one yielding 5% in a regional town, if the capital growth makes up the difference. But that is a bet on future growth, and it only works if you can afford the holding costs in the meantime.
Most self-managing landlords sit somewhere in the middle. They want a property that does not bleed too much cash each month, but they also want to own something in a location with genuine long-term demand. Yield helps you quantify the cash flow side of that equation.
Common Mistakes When Calculating Rental Yield
Using gross yield to compare investments. Gross yield is a screening tool, not a decision-making tool. A unit with a 5% gross yield and $7,000 a year in strata levies can easily net less than a house with a 4% gross yield and minimal outgoings.
Forgetting vacancy. If your property sits empty for three weeks while you find a new tenant, that is three weeks of zero income plus ongoing costs. Build a vacancy allowance into your net yield calculation, even if your property has been fully tenanted so far.
Using the wrong property value. If you bought for $450,000 five years ago and the property is now worth $600,000, your yield on current value is lower than your yield on purchase price. Both numbers have a use, but current value gives you a comparable figure against other opportunities.
Ignoring land tax. Land tax thresholds and rates vary by state and can change your net yield meaningfully, especially if you own multiple properties. Our land tax guide covers how it works in each state.
Not tracking actual expenses. Estimated yield is a starting point. Actual yield, based on real income received and real expenses paid, is what tells you how your property is genuinely performing. If you are not tracking expenses throughout the year, your net yield calculation is a guess.
Track Your Actual Yield, Not Just an Estimate
Calculating rental yield once is useful. Tracking it over time is where you start making better decisions, whether that means adjusting your rent to match the market, cutting unnecessary costs, or recognising that a property is not pulling its weight.
propkt calculates both gross and net yield automatically from the income and expenses you record, so you can see exactly where each property stands without building a spreadsheet.
Frequently Asked Questions
What is a good rental yield in Australia in 2026?
It depends on the city and property type. Gross yields of 3% to 4% are typical for houses in capital cities, while units often sit between 4% and 5%. Darwin leads at over 5% for houses. Generally, a gross yield above 4% is considered solid in a metro area.
What is the difference between gross and net rental yield?
Gross yield uses your total annual rent divided by the property value. Net yield subtracts your annual expenses first, giving you a more realistic picture of what the property actually earns. Net yield is always lower than gross, and is the more useful number for investment decisions.
Should I use purchase price or current market value to calculate yield?
Use the current market value. Your purchase price tells you your yield on original investment, which is useful for tracking personal performance, but market value gives you a comparable figure for measuring a property against others.
Does rental yield include mortgage repayments?
No. Standard rental yield calculations exclude mortgage costs because they depend on your deposit size and loan structure, not the property itself. This makes yield comparable across properties regardless of how they are financed. Your cash flow calculation, which is separate, includes mortgage costs.
How do I improve the rental yield on my property?
You can increase the rent to market rate, reduce vacancy periods, or cut expenses like unnecessary property management fees. Cosmetic improvements that justify a higher rent, such as fresh paint or new fixtures, can also lift yield. See our guide to setting the right rent price for more detail.