Low vacancy rates have pushed up asking rents and improved returns for investment properties, with gross rental yields as high as 9% in some suburbs.
National rental yields trended upwards from late 2022 to early 2023 following the rise in advertised rent prices and the tightness of the market.
The typical rental yield in capital cities is 4.8% for units and 3.6% for houses. This is respectively 0.8 ppt and 0.4 ppt higher than the levels seen in August 2022. Gross rental yields are calculated before other costs such as maintenance, rates and leasing costs.
For units, gross rental yields are higher than seen before the pandemic.
This trend not only spells good news for people with investment properties but also for those looking to invest.
Rental yield tends vary by location, so landlords in some areas are earning larger returns.
To determine where these areas were, we looked at the suburbs with the highest median rental yields.
| Suburb | State | SA4 | Median rental yield |
| Moulden | NT | Darwin | 7.1% |
| Woodroffe | NT | Darwin | 6.8% |
| Camillo | WA | Perth - South East | 6.8% |
| Brookdale | WA | Perth - South East | 6.8% |
| Medina | WA | Perth - South West | 6.7% |
| Balga | WA | Perth - North West | 6.6% |
| Hilbert | WA | Perth - South East | 6.6% |
| Zuccoli | NT | Darwin | 6.5% |
| Coodanup | WA | Mandurah | 6.5% |
| Gray | NT | Darwin | 6.4% |
For houses, Moulden and Woodroffe in Darwin topped the list with median yields at 7.1% and 6.8% of a property's value.
Houses in Camillo and Brookdale in Perth's South East also had high returns. Rental yields were 6.8% for both suburbs.
Owners of rental houses in Medina in South West Perth received sizeable yields as well.
| Suburb | State | SA4 | Median rental yield |
| Orelia | WA | Perth - South West | 9.3% |
| Karama | NT | Darwin | 8.6% |
| Gray | NT | Darwin | 8.3% |
| Driver | NT | Darwin | 8.2% |
| Bakewell | NT | Darwin | 7.9% |
| Glendalough | WA | Perth - Inner | 7.9% |
| Balga | WA | Perth - North West | 7.8% |
| Millner | NT | Darwin | 7.8% |
| Osborne Park | WA | Perth - North West | 7.7% |
| Armadale | WA | Perth - South East | 7.7% |
For units, Orelia in Perth's South West and Karama in Darwin eclipsed all other suburbs in terms of yield, at 9.3% and 8.6% respectively, which was close to twice as much as the national median.
Gray and Driver in Darwin were not far behind with gross yields respectively equal to 8.3% and 8.2% of a unit's value.
Suburbs in Darwin have historically had higher yields relative to other capitals and are likely to continue to do so. This is because a larger proportion of households rent in Darwin compared to the national average (46.7% vs 30.6%) meaning that there is higher demand for rentals.
Homes in Perth also have higher investment yields as properties tend to be more affordable. Exceptionally low vacancy rates have pushed up rental prices in Perth more than the capitals in the past year which is contributing to greater yields as well.
With vacancies expected to remain low in the short to medium term, we anticipate that rents will increase further, though at a slower rate than the past year. Rental yields are likely to continue increasing as tight conditions persist.
