Top Rental Yield Suburbs in Australia's Major Cities (2025 Edition)

In capital cities, 4-5% is strong, 5%+ is excellent. Perth averages 5.8% on units (best metro), Adelaide 5.3%. Sydney's tough - 3.9% average makes 5%+ exceptional there. Melbourne CBD units hit 8.6% (highest metro suburb), but that's outlier territory. Regional areas 6-8% is normal. Anything under 4% in capitals means you're banking on growth, not cashflow.

Perth leads at 4.3% citywide average, driven by mining recovery and rental shortage (0.7% vacancy). Adelaide's close at 4.6% with affordability advantage. But here's the nuance: Melbourne's inner-city units (CBD, Carlton, Travancore) deliver 7.5-8.6% - nation's highest. So it depends: consistent city-wide yields? Perth. Suburb-specific high yields? Melbourne CBD units. We're seeing Perth + Brisbane combo working well for diversified portfolios.

Units win on yield, houses win on growth. Units typically return 1-2% higher yields (less capital per property, similar rent). Sydney: houses 2.7%, units 3.9%. Melbourne: houses 2.9%, units 4.8%. But houses appreciate faster long-term and avoid strata headaches. For cashflow-focused portfolios, units make sense. For wealth-building, houses. Most sophisticated investors hold both - units for income, houses for equity.

Depends on why they're high. Melbourne CBD's 8.6% reflects genuine student/worker demand near universities and jobs - sustainable. But 8%+ in declining regional towns signals falling prices masking as good yields - red flag. Check: Is vacancy low? Is population/employment growing? Is infrastructure investment happening? If yes, high yields are opportunity. If no, you're catching a falling knife.

Gross yield = (annual rent ÷ purchase price) × 100. But gross is misleading. Calculate net: (annual rent - all costs) ÷ (purchase + acquisition costs) × 100. A 6% gross often becomes 3-3.5% net after rates, strata, management, maintenance, vacancy. Also stress test: can you hold if rates rise 2%? If vacancy hits 8 weeks? If not positively geared after those shocks, the yield isn't high enough.

Wrong question - it's not either/or, it's sequencing. Early investors need cashflow to hold properties and build equity without bleeding cash. Yields let you accumulate multiple properties. Once you've got scale (3-5 properties), shift to growth assets using equity from cashflow portfolio. The hybrid works: 60-70% growth-focused (Sydney/Melbourne houses), 30-40% yield-focused (Perth/Adelaide/regional units). Pure yield portfolios underperform over 20 years, but pure growth is hard to finance early on.