New realestate.com.au data shows Australia’s rental yields have broadly declined over the past 12 months, with stronger home price growth outpacing rent increases in most markets, while Sydney and Melbourne have remained comparatively stable.
Across the country, gross rental yields have come under pressure as property values have risen faster than rents.
However, Sydney and Melbourne have avoided the sharper declines seen in other capital cities, with yield movements largely flat over the year as rent growth and price growth have broadly offset each other.
REA Group senior economist, Angus Moore, said the divergence reflects differences in home price growth across the country.
“So the simple answer is home prices just haven’t been growing as quickly in Sydney and Melbourne, you know, Melbourne especially, as they have in other parts of the country,” he said.
Mr Moore said stronger capital growth in other markets has been the key driver of declining yields elsewhere.
“The pace of home price growth in Perth especially, but even Brisbane and Adelaide has just been strong enough to offset that increase in rent and see gross rental yields decline in the past twelve to eighteen months,” he said.
Darwin recorded the highest rental yields across the capital cities in April, led by Berrimah at 7.6 per cent for houses, while Karama and Malak both recorded 7.7 per cent for units.
Moore said investor activity in the Northern Territory has increased significantly, noting the impact of the market’s smaller size on volatility.
“We’ve been seeing a lot of investor demand in the Northern Territory. The share of loans going to investors in the territory hit a record high last year,” he said. “The Northern Territory is a very small market, so it doesn’t take a lot of buyers to change that.”
Sydney and Melbourne recorded relatively stable yields over the year: in Sydney, Cranagan Bay recorded the highest house yield at 4.9 per cent, while Ultimo and Auburn recorded unit yields of 6.3 per cent. In Melbourne, the highest house yields were recorded across Warburton, Hastings, Clyde, Wollert and Coolaroo at 4.3 per cent.
Mr Moore said investor demand continues to be concentrated in more affordable areas.
“We do see that search interest from investors disproportionately towards those more affordable areas. Investors do tend to favour that sort of most affordable stock,” he said.
Units continued to record higher rental yields than houses across capital cities, reflecting lower purchase prices.
Outside the capitals, regional Western Australia recorded the highest rental yields nationally. Houses in Coolgardie recorded a yield of 11.5 per cent, followed by Kambalda East at 11.0 per cent. In the unit market, Newman recorded the highest national yield at 13 per cent, followed by Pegs Creek at 12.9 per cent.
These markets are strongly influenced by resource-sector activity, with Mr Moore pointing to the role of mining and associated demand in driving elevated rental returns across regional Western Australia in particular.
“The interesting divergence is between capital city and regional areas in terms of growth rental yields and also the predominance of mining and mining adjacent areas,” he said.
“The data reflect the very high rents associated with resource areas,” he said.
However, he cautioned that conditions in these markets can shift quickly depending on changes in mining activity, given the relatively small size and cyclical nature of many of these regional towns.
“Small towns are quite variable in terms of demand based on what’s going on in the mining sector.”
Mr Moore also pointed to the impact of pandemic-era migration on regional rental markets.
“We saw quite strong migration or internal migration from capital cities to regional areas during the pandemic,” he said. “It doesn’t take a lot of extra demand for that to soak up the available rental stock.”
While conditions have eased from pandemic peaks, he said regional markets remain tight, with continued pressure on rents.
Key take outs:
- Across the capital cities, Darwin recorded the highest rental yields in April, with Berrimah (7.6%) the top suburb for houses, and Karama and Malak (7.7%) equally leading for units over the year.
- In Sydney, houses in Cranagan Bay (4.9%) led for highest rental yields, while Ultimo and Auburn (6.3%) were on top for units.
- For Melbourne, houses in Warburton, Hastings, Clyde, Wollert and Coolaroo all recorded the equal highest rental yield of 4.3%.
- Units typically recorded higher rental yields than houses across the capitals, likely due to their lower purchase price.
- Nationally, regional WA saw the highest rental yields, with houses in Coolgardie leading over the last 12 months to April 2026, with a rental yield of 11.5%, followed by Kambalda East at 11.0%.
- For units, Newman in regional WA was top of the rank nationally, with a rental yield of 13%, followed by Pegs Creek at 12.9%.