The Best Rental Yield Suburbs in Australia

Ask me where the best rental yields in Australia are and I can actually tell you now. We've ranked every state. But I'll save you the scroll on one thing first, because the top of most of those lists is a mining town or a country centre of two thousand people, and I wouldn't put my own money in half of them. The yield is real. What sits underneath it is the part the list never prints, and that's the bit worth reading.

Cotality has the national gross yield at 3.85 percent, the highest it has been since August 2019, ranging from 3.4 percent in Sydney to 6.5 percent in Darwin. Yields are repairing because rents kept climbing while values eased, which is the first time in years the arithmetic has moved in a buyer's favour.

That national figure is an average of about fifteen thousand suburbs, which means it describes almost none of them. So we went underneath it.

First, what a yield actually is

Plenty of people have never had this explained properly, and there's no reason they should have. So before the lists, here it is in one line.

What a yield has to clear before it pays you

A number on its own means very little. The question is what it has to beat.

With investment loans around 6.5 percent, a property roughly covers its own costs somewhere near a 7 percent gross yield, once you allow for the usual 20 to 25 percent of rent that disappears into rates, insurance, management and repairs. Below that, you're contributing. Well below it, you're contributing a lot.

That single line explains why most of the lists below look the way they do. Very few suburbs in Australia clear 7 percent, and the ones that do are rarely where you'd want your money parked for a decade.

The highest yields in every state

Each state has two lists. The first is the top ten on gross yield. The second is the one most people are actually asking for, the strongest yields you can still buy under $800,000.

The thing that jumps out

Units dominate. In the ACT it's ten out of ten. In Victoria, Queensland, South Australia, Western Australia and Tasmania it's seven out of ten. Nationally, units take the majority of almost every list.

That isn't an accident. A unit costs less to buy and rents for a surprisingly similar amount to a house in the same suburb, because tenants pay for location and bedrooms, not land. Strip the land out of the price and the yield goes up.

Canberra is the cleanest example. Houses there top out around 4.8 percent. Units in Curtin and Lyons do 7.13 and 6.74 percent on medians around $350,000. Same city, same tenants, nearly three points of difference.

Read the top of these lists carefully

Two patterns run through the strongest numbers, and both are worth understanding before anyone gets excited.

Resources towns. Look at Western Australia and South Australia. Boulder, South Kalgoorlie, Kalgoorlie, Bulgarra and Millars Well in the Pilbara. Whyalla and Roxby Downs. These are genuinely high yields and they're genuinely paid, but they're paid by one industry. A single mine's roster decision moves the rent, the vacancy rate and the price together, in the same direction, in the same quarter. That's a very different risk to a suburb where the tenants work in a dozen different industries.

Thin markets. The smaller the town, the fewer the buyers when you want out. A 9 percent yield in a place that trades thirty houses a year is a different asset to a 5 percent yield twenty minutes from a capital, even though the lists put them in the same column.

The Northern Territory belongs in the same conversation, for a different reason. Darwin shows well on current yield because prices there are low, and prices are low because the market has gone close to nowhere for a decade. Cotality has Darwin up 33.8 percent over ten years, against Brisbane on 105.3, Adelaide on 104.3 and Perth on 97.6. A strong yield on a value that hasn't moved in ten years is a real income return and very little else. Go in knowing which of the two you're buying.

If income is what you're after, the suburb is only half the lever

Here's the part the yield lists can't tell you, and it's the reason we don't start with a suburb.

Everything above treats a property as fixed. You buy a house or a unit, you rent it to one household, and the yield is whatever the market hands you. On that basis, chasing income means chasing postcodes, and the postcodes that pay best are mining towns and small regional centres.

But the yield isn't only a function of where you buy. It's a function of what you build and how it's configured. The same block in the same suburb can produce very different income depending on what sits on it.

Those options change the income side of the sum rather than the price side. That matters, because it means you don't have to accept a 3.4 percent Sydney yield or move your money to Mount Isa to escape it. You can buy in a market you'd actually want to own in, and do something with the property.

It also means the trade-off at the top of these lists stops being the only trade-off available. Chasing yield by postcode asks you to accept a single-industry town or a thin market. Changing the property asks you to accept a build timeline instead, and a build timeline ends.

That's the work we do. Not finding the highest number on a list, but looking at what a site will allow, what the local rental market will absorb, and which configuration makes the numbers work in a place with more than one employer.