Rental Yields Are Rising as House Prices Fall: Where the Yield Maths Works in Australia in 2026

Published: 12 September 2026 · Investment Strategy

Updated 12 September 2026. Legislation last checked 11 September 2026. Every table below carries its own “data as at” line because the inputs come from different releases.

What is rental yield expansion? Gross rental yield is annual rent divided by property value. Yield expansion is the rise in that ratio caused by movements in either input: rents rising, values falling, or both at once. It says nothing by itself about net income, financing cost or total return.

Key Takeaways

• The national gross rental yield is 3.79%, the highest since September 2019 on Cotality's August 2026 index; the combined-capitals figure is 3.6%, up from a 3.34% low in December 2025. The two figures are different series and this article never uses one for the other.
• Rents have contributed roughly as much as prices. On our approximate attribution (formula shown below), the price fall and the rent rise since December each account for about 10 to 13 basis points of the combined-capitals expansion. This is our arithmetic, not a Cotality decomposition.
• Units carry higher gross yields in every capital and every broad region (4.6% vs 3.5% nationally) and fell less than houses over the quarter in seven of eight capitals. Perth is the exception, and strata, defects and resale depth qualify the whole comparison.
• The pre-tax cash-flow break-even is a long way up. At 80% LVR interest-only on the RBA's 6.50% July figure, about 6.4% gross before tax and before vacancy on our assumptions. Only Darwin's unit market averages above it.
• Scenario arithmetic on CBA's published troughs lifts yields modestly, not decisively: Sydney from 3.3% to about 3.6%, Melbourne from 4.0% to about 4.4%, the five largest capitals from 3.6% to about 3.9%. These are our calculations on CBA's forecasts, not CBA's yield forecasts.
• A rising yield with weak rent growth, rising vacancy and falling values is a fundamentals warning. Canberra (4.3% yield, unit rents +1.4%, SQM vacancy 1.8%, values −2.8% over the quarter) meets all three conditions.
• From 1 July 2027 the shortfall stops being deductible against wages for established dwellings acquired after 7:30pm on 12 May 2026 under the enacted reform. That is why gross yield has moved from a preference to a load-bearing number, and also why gross yield alone cannot be the decision.

Which Australian City Has the Highest Rental Yield? The August 2026 Scoreboard

Source: Cotality Home Value Index, August 2026 (index results as at 31 August 2026, released 1 September 2026): gross yields, three-month value change, and the capital-city “annual change in rents” charts for houses and units. Vacancy: SQM Research National Residential Vacancy Rates, July 2026 (released 13 August 2026; SQM's August figures had not been published at the time of writing). Cotality's own vacancy measure, which uses a different method, read 1.9% nationally in August. Data as at: Cotality 31 August 2026; SQM 31 July 2026. This table is published as HTML on the page, with the charts as a supplement.

Two structural facts sit inside that table and neither is new. The yield map is the price map inverted: the cheapest capital (Darwin, median $647,259) yields nearly twice the dearest (Sydney, $1,222,718). And units out-yield houses in every market on the board, by between 0.4 and 1.6 percentage points. What is new in 2026 is the value column: every capital except Darwin has fallen over three months, so the denominator is shrinking under all of those yields at once.

Why Are Rental Yields Rising in Australia in 2026? The Arithmetic

The scissors on one property. The table applies value and rent changes to a single illustrative property so the mechanics are visible.

Source: our arithmetic. Starting point $900,000 purchase price, $650 a week rent ($33,800 a year, 3.76% gross). Yield is recalculated on the new value, which is how index-level yields are reported. Illustrative only.

Rents versus prices: an approximate attribution, ours not Cotality's. Cotality publishes the yield, not a decomposition of why it moved. The following is our approximation. Because gross yield = rent ÷ value, the change from December 2025 to August 2026 is approximately:

Yield(Aug) ≈ Yield(Dec) × (1 + rent change) ÷ (1 + value change)

Inputs: combined-capitals yield 3.34% in December 2025 (Cotality); combined-capitals values −3.0% year to date to August (Cotality's YTD figure, used as a proxy for the December-to-August move); rents up roughly 3.2% to 3.8% over the same eight months (Cotality's rental index has averaged about 0.4% a month and 5.7% over the year). Result: 3.34% × 1.035 ÷ 0.970 ≈ 3.56%, against Cotality's reported 3.6%. Holding rents flat, the value fall alone lifts the yield to about 3.44% (+10 basis points); holding values flat, the rent rise alone lifts it to about 3.46% (+12 basis points). On this approximation the two inputs contributed roughly equally. The precise split depends on the exact December-to-August value change, which Cotality does not publish in this form.

Six years of compression, then the turn. Combined-capital gross yields fell to a record-low 2.92% in January 2022 as the pandemic boom outran rents, rebuilt through the 2022 to 2023 rate shock, compressed again through the 2024 to 2025 upswing to a 3.34% low in December 2025, and have expanded since then to 3.6% (Cotality Housing Chart Pack for the historical series; August 2026 HVI for the current figure). The national series moved from a 3.56% low to 3.79%. We describe this as “expanded since December 2025” rather than as an unbroken monthly run because Cotality's month-by-month yield observations are not reproduced in the releases we cite.

How Far Can Yields Expand? Scenario Arithmetic on the Published Forecasts

The forecasters have moved one way since the May Budget. CBA, which had national values flat for 2026 in early June, revised on 2 September (as reported) to a 9% national peak-to-trough fall and about 10% across the five largest capitals, with Sydney −13% and Melbourne −12% and a trough during 2027. NAB's August Housing Monitor has the eight capitals −5% over calendar 2026 with Sydney and Melbourne around 10% peak to trough. ANZ has the capitals −10.6% into 2027. Domain's June financial-year outlook is the mildest.

The formula is transparent and every input is either a published forecast or a stated assumption:

Yield(trough) ≈ Yield(now) × (1 + 3% rent growth) ÷ (1 + remaining fall), where remaining fall = (1 + forecast peak-to-trough) ÷ (1 + fall already recorded) − 1.

Source: Cotality Home Value Index, August 2026 (yields, from-peak); CBA Economics housing forecast revision, 2 September 2026, as reported in the press (national, five-largest-capitals, Sydney and Melbourne figures only; CBA's city-level calls for Brisbane, Adelaide and Perth were not available to us in primary form and are not shown). Rent growth to the trough assumed at 3%. Outputs are scenario arithmetic, not CBA forecasts. Data as at 4 September 2026 for forecasts.

Two caveats belong here. First, Cotality's Tim Lawless warned in the August release that “record high rental unaffordability may prove a constraint in rents rising materially further from here.” If rent growth stalls, the expansion becomes a pure denominator story. Second, the forecasts describe aggregates. Within Sydney, houses fell 5.4% over the quarter against 2.9% for units; the segment falling fastest expands its yield fastest, and that is not automatically the segment to buy.

What Rental Yield Do You Need to Break Even? Gross, Net and Cash Flow

The interest line, with the series named. The Reserve Bank's Lenders' Interest Rates, Statistical Table F6 for July 2026 (published September) puts the average rate on new investment housing loans funded in the month at 6.41%, with principal-and-interest at 6.32% and interest-only at 6.50%; the average rate on outstanding investor loans was 6.44%. Advertised rates run wider: comparison sites list the lowest investor variable rates from about 5.85% and interest-only from about 6.13% at 80% LVR (as at 10 September 2026), while averages across all advertised investor products sit above 7%. Where a borrower lands typically depends on loan size, deposit, security type and whether the lender prices interest-only at a premium, which most do.

The holding-cost line. Council rates, water, landlord and building insurance, property management (commonly 5% to 8% of rent plus letting fees), maintenance and, for units, strata levies. Cotality's positive-cash-flow research in June assumed holding costs of 2.5% of value; our table uses a leaner 1.2% for a low-strata dwelling to show the best case. Real properties land between the two.

Source: RBA Statistical Table F6, July 2026 (new investment loans, interest-only, 6.50%); holding-cost assumption ours. Excludes vacancy, acquisition costs, land tax and depreciation. Principal-and-interest at 6.32% over 30 years raises the 80% cash-flow requirement to roughly 7.2% gross, but principal repayments build equity and are not an economic cost; the 7.2% is a cash-flow requirement, not an economic break-even. Data as at July 2026 (RBA).

Two worked examples, both illustrative and both incomplete by design. A $750,000 unit at the national unit yield of 4.6% rents for about $663 a week, or $34,500 a year. With a $600,000 interest-only loan at 6.50%, interest is $39,000; add $9,000 of holding costs and the pre-tax shortfall is about $13,500 a year, or $260 a week. Allow two weeks of vacancy ($1,327) and it is about $14,800. A $1,000,000 house at the national house yield of 3.5% rents for $35,000; interest on $800,000 is $52,000, holding costs $12,000, shortfall about $29,000, or $558 a week, or about $30,300 with two weeks vacant. Neither figure includes stamp duty, buying costs, land tax, depreciation or a repairs reserve; they are the operating gap before tax, nothing more. Cotality's own illustrative example in the August release reaches the same conclusion, and Lawless states it plainly: “yields would need to rise substantially before rental income offsets holding costs, particularly while interest rates remain elevated.”

Net yield: a house and a unit side by side. Because the city tables are gross, here is what the same $750,000 buys net of running costs on our assumptions.

Source: our illustrative assumptions; every cost varies by property, state and building. The unit's gross advantage of 1.1 points narrows to about 0.9 points net once strata is included. Neither figure includes financing, land tax, acquisition costs or depreciation.

The serviceability line. Whether you can borrow 80% at all is a separate test. APRA's serviceability buffer of 3 percentage points above the actual rate remains in place, so a 6.5% loan is typically assessed at about 9.5%. Most lenders also count only a portion of rental income when assessing repayment capacity, commonly 70% to 80% of gross rent, so a property's yield helps borrowing capacity less than its headline suggests. Lenders differ on negative-gearing add-backs, existing-debt floor rates and interest-only terms, so identical incomes can produce materially different limits. The borrowing capacity calculator applies the buffer; a broker will know which lenders shade rent least.

The deposit line. Borrowing capacity is not deposit capacity. At 80% LVR on the $750,000 unit, the buyer needs $150,000 plus stamp duty and costs, which in most states adds $25,000 to $40,000 at that price; above 80%, lenders' mortgage insurance applies. Our stamp duty calculator covers each state. The fastest way to reach a cash-neutral position in the table above is a bigger deposit, and the deposit is a savings decision rather than a market one.

Run your own property through the rental yield calculator (gross and net side by side, with city benchmarks) and the cash flow calculator.

The Tax Reform Makes Yield a Load-Bearing Number

For forty years the answer to “this property loses $13,500 a year” was “yes, and about $5,000 of that comes back at tax time.” That answer now has an expiry date and a contract-date condition attached, and the three measures in the Act need to be kept separate.

1. Negative-gearing quarantining (Schedule 2). For established residential dwellings acquired after the Budget-night cut-off, net rental losses will from 1 July 2027 be quarantined to residential-property income, including capital gains on residential property, and carried forward rather than offset against salary. Two boundaries matter. The grandfathering boundary is the acquisition date: dwellings acquired before 7:30pm on 12 May 2026 are outside the quarantine with no per-taxpayer cap. The new-build boundary is dwelling type: the exception for newly constructed dwellings applies to the negative-gearing quarantine, so a post-May investor in new stock keeps the wage deduction. The 2026-27 income year is unaffected for everyone; the quarantine starts with the 2027-28 year.

2. The CGT discount replacement. This is a different measure with a different transition. From 1 July 2027 the 50% CGT discount for individuals and trusts is replaced by CPI indexation of the cost base plus a 30% minimum tax rate, with a deemed disposal immediately before 1 July 2027 that preserves the 50% discount on gains accrued to that date. It is not keyed to the 12 May acquisition date, and the enacted regime carries specific provisions for eligible new residential dwellings that are beyond this article's scope; our negative gearing and 2027 transition guide sets them out.

3. Superannuation funds. Complying superannuation funds, including SMSFs, are outside the individual-and-trust CGT-discount replacement and retain their existing concessional CGT treatment, and they are outside the negative-gearing quarantine. They are not “exempt from the reform”: Division 296, enacted separately and in force since 1 July 2026, applies an additional tax to realised earnings on balances above $3 million, and the Act's superannuation provisions include the ban on new limited recourse borrowing for residential property for contracts exchanged from 10 August 2026 (existing arrangements and their refinancing are grandfathered; business real property borrowing continues). The SMSF property service page covers the post-August rules.

The worked example, before and after. Take the $750,000 unit with its $13,500 pre-tax operating shortfall. For an investor on the 37% marginal rate (39% with the Medicare levy) who acquired before 12 May 2026, or who buys a new dwelling, the loss reduces tax by about $5,265 and the after-tax cost is roughly $8,200 a year, or $158 a week. For the same investor buying the same established unit after 12 May, the 2026-27 year still works the old way, but from 1 July 2027 the $13,500 stays a $13,500 cash cost, with the loss carried forward against future residential-property income or the eventual gain. The after-tax cost of the same unit rises from about $8,200 to $13,500 a year, an increase of roughly 65%.

Source: Treasury Laws Amendment (Tax Reform No. 1) Act 2026 as enacted (Assent 26 June 2026); ATO guidance on quarantined-loss mechanics pending as at 11 September 2026. Illustrative figures; individual circumstances differ and this is not tax advice.

Lawless made the market consequence explicit in the August release: “With changes to property taxation policies announced in the federal budget, investors are likely to place a greater emphasis on higher-yielding opportunities than they did before 12 May.” The ABS Lending Indicators for the June quarter, released 14 August, show the aggregate response first: new investor loan commitments fell 8.6% in number, the largest quarterly fall in number since the September quarter of 2022, and 10.2% in value.

Where Yields Are Expanding, and Whether the Expansion Is Sustainable

Expansion and sustainability are different tests. The first table classifies each capital by which half of the ratio is moving. The second applies three sustainability checks: vacancy direction, the supply pipeline (advertised stock), and rent affordability, using Lawless's own caveat that record rental unaffordability may cap further rent growth.

Source: Cotality Home Value Index, August 2026 (values, rent growth); SQM Research vacancy, July 2026; Cotality Property Market Indicator Summary, four weeks to 30 August 2026 (listings; city ranges as published in our spring 2026 listings analysis); REIWA, July 2026. Classification is ours. Data as at: values and rents 31 August; vacancy 31 July; listings 30 August 2026.

Sydney: the fastest expansion from the lowest base. Sydney houses yield 2.9%, units 4.4%. Values fell 4.7% over the quarter, the largest of any capital, and are 7.1% below their February peak, so the yield is rising mostly because the price is falling. House rents are still growing at 5.3% but unit rents have slowed to 3.9%, and SQM's vacancy rate has drifted from 1.5% to 1.7% over the year while Cotality's own measure reads 2.2%, the loosest mainland capital. Sustainability check: vacancy easing, rent growth decelerating in the higher-yielding segment. The arithmetic points at units, where the yield is 1.5 points higher and the quarterly fall (−2.9%) was about half the house fall (−5.4%), but the rent-momentum test is weakening.

Melbourne: the highest large-capital yield, with a history. At 4.0% for dwellings and 5.1% for units, both halves are moving: values −3.9% over the quarter, rents +5.1%. The caveat is the five-year column in Cotality's release, where Melbourne's dwelling values are −3.9% over five years, the only capital with a negative five-year return. Inner-Melbourne unit yields are high partly because unit prices have gone nowhere for a decade. It is a genuine cash-flow opportunity for a buyer who wants income, and a warning for one who assumes yield expansion will be followed by growth. Our four-signals framework for Melbourne covers entry timing.

Brisbane and Adelaide: rent-led, with supply now the test. Both markets grew about 64% over five years on Cotality's index and their yields compressed accordingly; Brisbane at 3.4% is near record lows. Rents are doing the work (Brisbane houses +6.7%, Adelaide +5.8%) and vacancy is very tight (0.9% and 0.6%). The sustainability question is the supply pipeline: Cotality's 28-day count to 30 August had total listings in both cities up roughly 40% to 51% on a year earlier, the fastest stock builds in the country. Rent growth has held so far because vacancy has not moved; if listings keep building and turn into rental stock, the numerator test weakens.

Perth: rent momentum against the fastest stock rebuild. Perth's dwelling yield of 3.9% (units 5.0%) sits on the strongest rent growth on the mainland (houses +8.1%, units +7.4%) and a 56% five-year rent increase, about $283 a week. Vacancy is 0.6%. The offsets: values fell 3.2% over the quarter and Cotality revised its July Perth print from +0.1% to −1.3%, the largest downward revision of any capital; REIWA reported listings up 111.5% year on year in July; and Perth units fell 4.1% over the quarter against 3.0% for houses, the one capital where the higher-yielding segment fell more. Rent-to-income pressure is also highest here after a 56% five-year rent rise. Perth passes the rent test today and fails the supply-direction test.

Hobart and Darwin: the small-capital yield leaders. Hobart's 4.4% rests on 8.5% house rent growth and near-flat values, with vacancy tightening to 0.6%. Darwin's 6.3% (units 7.4%) is the only capital-city yield that clears the 60% LVR cash-flow break-even in the table above; rents are up 12% for houses, vacancy is 0.3% on SQM's July count and values are at their peak. High current yield and sustainable long-term yield are different claims, and Darwin's own record makes the point: Cotality's ten-year dwelling growth of 34.0% against five-year growth of 30.6% means values were close to flat between 2016 and 2021, after the post-resources-boom correction, before the recent run. A market that can spend half a decade flat has a rent and vacancy cycle to match, and the thin sales volumes that produce those swings also make exit timing harder. Darwin's yield is compensation for that cyclicality as much as it is income.

Canberra: the measurable warning case. Canberra yields 4.3% for dwellings and 5.4% for units, the second-highest unit yield of any capital. The framework, not the adjective: yield expansion (values −2.8% over the quarter, 5.2% below the May 2022 peak) plus weak rent growth (houses +4.0%, units +1.4%, the weakest in the country) plus elevated vacancy (SQM 1.8%, the loosest capital) equals a higher probability that the yield reflects declining capital and rental fundamentals rather than improving income. All three conditions are met. That does not make Canberra uninvestable; it means its 4.3% should be underwritten as a price-led yield with the stress test applied to rent, not as a rent-led one.

Regional Australia: the exception that is compressing. The combined regional yield of 4.3% still beats the capitals, and regional WA at 5.1% is the highest broad market. Regional South Australia is the only broad region still at its peak on Cotality's index, up 2.3% over the quarter with 11.4% annual growth, so its 4.4% yield is compressing while everyone else's expands. Regional NSW, Victoria and Queensland all fell over the quarter. Suburb-level league tables, including mining-town double-digit yields and diversified regional centres, are in our suburb-level rental yield league table, which currently carries 2025 data and is being refreshed to 2026.

Are Units Better Than Houses for Rental Yield?

Source: Cotality Home Value Index, August 2026, houses and units tables (quarterly change and gross yield). Data as at 31 August 2026. PropTrack's August index shows the same national pattern: units +3.0% annually against +1.5% for houses, and units 1.8% below peak against 2.9%.

The reasons are the ones set out in units vs houses for property investors in 2026: the affordability ceiling is doing the buying after three rate rises, demand has shifted toward cheaper dwelling types (PropTrack's August commentary makes the same point), and the apartment supply pipeline is thin. The yield case adds a fourth: for a post-May buyer of established stock, the higher unit yield reduces the quarantined shortfall in the tax table above by roughly a third on the same purchase price.

The counter-case is in the net-yield table earlier: strata narrows the gap, and building-specific risks (special levies, cladding and defect exposure, insurance availability, a thinner resale market for some tower stock) are not visible in any yield figure. Read the strata report before the yield.

Does a Higher Rental Yield Mean a Better Investment? The Falling-Knife Test and Total Return

Buyers who screen on gross yield alone in a falling market buy the properties that are falling fastest. Five checks separate expansion you want from expansion you are being paid to accept.

1. Is the rent still growing? Cotality's rental index rose 0.4% in August, in line with its two-year average. If a suburb's asking rents have gone flat while the city's are rising, the expansion there is all denominator.
2. Which way is vacancy moving? SQM's July print holds the national rate at 1.3% but the map has split: Sydney, Melbourne and Canberra easing to 1.7% to 1.8%; Adelaide, Perth, Brisbane, Hobart and Darwin at 0.9% or below. Cotality's own August measure rose to 1.9%, its highest since January 2025. Direction matters more than level. Current figures live on our Australian vacancy rate tracker.
3. How much of the stock is stale? Cotality counted capital-city total listings 24.4% above a year ago in the four weeks to 30 August while new listings were 5.6% below, so the surplus is homes that have not sold. Median days on market reached 35 over the three months to July and the median vendor discount widened to 3.8% (Cotality chart pack, data to July). Final auction clearance across the capitals was 49.3% in the week ending 6 September against 70.0% a year earlier, with 480 properties passed in and 245 withdrawn. A suburb with a high stale-stock share is one where the yield will keep “improving” for the wrong reason.
4. What is the employment base? A yield that rests on one employer, one commodity or one government program is priced for that concentration. Regional WA's 5.1% and Darwin's 6.3% both carry it.
5. Is the yield expanding faster than the city's? If so, ask why the market is repricing that suburb ahead of its neighbours. Sometimes the answer is a supply pipeline you have not seen.

Sentiment is a sixth signal and it cuts both ways. The Westpac–Melbourne Institute survey for September (taken 31 August to 3 September) had the “time to buy a dwelling” index down 10.7% to 85.5 and the share of consumers naming real estate the wisest place for savings at 4.7%. Few competing buyers is what a yield-hunter wants. It is also a market where 64% of consumers expect mortgage rates to rise. Low sentiment improves negotiating position; it does not tell you the price has stopped falling.

Total return is the decision, gross yield is an input. Total return = net rental income + change in value − transaction and holding costs, over the holding period. A Melbourne unit at 5.1% gross and roughly 3.4% net, on a five-year value record of −3.9%, has to be bought for its income and its price paid accordingly. A Brisbane house at 3.3% gross with 64% five-year growth behind it has to be bought for growth that the current data no longer promises. Neither yield figure decides the question; the expected path of value and net rent does.

The Investor Decision Matrix

Source: classification and actions are ours, drawn from the Cotality, SQM and listings data above. Illustrative, not a recommendation for any specific property.

Ownership structure changes the arithmetic, and the three cases differ. An individual cash buyer faces no interest line, so the cash-flow break-even collapses to holding costs, but the decision is an opportunity-cost one (a 4% to 6% gross yield against alternative returns after tax at their marginal rate) and land tax and CGT apply in full. An SMSF paying cash operates under superannuation rules: the fund cannot borrow for residential property under new arrangements since 10 August 2026, is taxed at 15% in accumulation (0% on assets supporting a retirement-phase pension within the transfer balance cap), must pass the sole-purpose test and related-party restrictions, and is subject to Division 296 above $3 million. A company or trust faces its own rate and the quarantine rules. Yield is the dominant return driver for all three unleveraged buyers, and it is the only one of the three for which “the break-even table is irrelevant” is accurate without qualification: the SMSF.

Negotiate on the published evidence. Days on market, the vendor discount, the pass-in count and the local total-listings change are published monthly. A vendor whose property has been listed for eight weeks in a market with 49% clearance is negotiating against the data. The appropriate offer still depends on local comparable sales, condition, rental income and vendor circumstances.

What Would Invalidate This Thesis?

• Rent growth materially slowing. Lawless's “rental unaffordability” constraint arriving would show first in the Cotality quarterly Rental Review (September quarter, expected October) as a quarterly print below the June quarter's 1.6%.
• Vacancy rising broadly. SQM's national rate moving above 1.5% and the sub-1% capitals loosening would remove the numerator's support.
• Rates rising again. A cash rate of 4.60% or higher lifts the interest line in every table above by about a quarter of a point of loan value. It typically also reduces borrowing capacity, though by how much varies by lender, income, existing debt and assessment method under APRA's 3-point buffer.
• Investor lending staying weak. If the ABS September-quarter Lending Indicators (November) show investor commitments still at or below the June quarter's level, the buyer pool for high-yield established stock is thinner than the yield alone suggests.
• Values falling faster than rents compensate. If CBA's −9% national path is exceeded, gross yields would rise further but the investment case would not, because the equity loss outruns the income gain.

Dated Signals Between Now and the Trough

• RBA, 28 to 29 September. Snapshot as at 10 September 2026: NAB forecasts a hike to 4.60% at this meeting; CBA and ANZ expect November; Westpac expects a hold through 2026 and argued on 8 September that the Board is unlikely to move on one monthly inflation read with the next CPI due a day after the meeting. Market-implied probabilities of a September hike derived from ASX cash-rate futures were reported between roughly two-thirds and four-fifths across published trackers (centralbank.watch, rbaratewatch.com) on that date. This is a dated snapshot and will age.
• ABS monthly CPI, 30 September. July's trimmed mean rose 0.5% in the month; a second hot print makes November live even if September holds.
• Cotality HVI and PropTrack HPI for September, expected around 1 October. A sixth monthly fall would take the combined capitals toward 5% below peak. Both series are tracked on our Home Value Index tracker and PropTrack Home Price Index tracker.
• Cotality Rental Review, September quarter (expected October) and ABS Lending Indicators, September quarter (November): the two releases that test the numerator and the buyer pool respectively.

The Bottom Line

What changed. Australia's national gross rental yield reached 3.79% in August 2026, its highest since September 2019, because values fell 3.6% from their March peak while rents rose 5.7%, and the combined-capitals yield has expanded from 3.34% to 3.6% since December 2025. Units carry higher gross yields everywhere and fell less than houses over the quarter in seven of eight capitals. The enacted tax reform removes the wage deduction from 1 July 2027 for anyone acquiring established stock after 12 May 2026.

Why it matters. Yield has moved from a preference to the number that decides whether a purchase is fundable, and it is still not the number that decides whether a purchase is good. On the RBA's July lender rates, a leveraged buyer at 80% runs a pre-tax shortfall at every capital-city average yield on our assumptions, and scenario arithmetic on the banks' forecast troughs closes only part of the gap. The useful distinction is which half of the ratio is moving: Perth, Darwin, Hobart, Brisbane and Adelaide are expanding mainly on rents; Sydney and Canberra mainly on prices. The first group is earning more rent. The second is being repriced.

What to monitor. SQM's August vacancy print, the RBA on 29 September, the August CPI on 30 September and the October price indices will decide whether the numerator holds while the denominator keeps falling. If rents stall, yield expansion becomes a pure price story and the falling-knife test applies everywhere. If they hold and values keep falling, the gross yield would continue to improve, but the investment case would not necessarily improve with it: the same arithmetic that lifts a yield also reduces the equity of the asset producing it. Run the property, not the index, through the rental yield calculator before the next print.