Investment & Renting
National gross rental yields reached 3.8% in August 2026 according to the Cotality September 2026 Housing Chart Pack, the highest reading since September 2019. That milestone matters because it marks the first sustained improvement in investor income yields in five years, reversing a compression that began in late 2019 and accelerated through the low-rate years of 2020 to 2022 when property values rose far faster than rents.
The combined capitals are recording a gross yield of 3.6%. The combined regional markets are at 4.3%. Seven years ago, before the rate cycle began and before the pandemic distorted both property prices and rental markets, those numbers looked similar. The reversal back to more rational yield levels is one of the more significant structural shifts in the September 2026 data.
Yield is a straightforward calculation. It is annual rent divided by property value, expressed as a percentage. When the numerator rises and the denominator falls simultaneously, yield improves at an accelerated pace. That is precisely what is happening in 2026.
National annual rent growth is running at 5.7%. Rents have been rising consistently since mid-2021, and while the rate of growth has moderated from the 8% to 10% peaks of 2022 and 2023, the 5.7% current reading still represents genuine and ongoing upward pressure on occupier costs. The supply side of rental housing has not improved fast enough to take pressure off tenants.
Simultaneously, national dwelling values are falling. The quarterly decline of 3.1% and the monthly declines recorded through August 2026 in nearly every capital city are pushing the denominator in the yield calculation downward. The combined effect is a yield improvement that is being delivered by the mechanics of the market rather than by any deliberate repricing of rental assets.
Rental growth is not uniform across Australia. The spread between the strongest and weakest rental markets in August 2026 is wide, and understanding where rents are rising fastest matters for investors evaluating individual market positions.
| Market | Annual rent growth | Gross yield |
|---|---|---|
| Darwin | +11.4% | 6.3% |
| Perth | +8.0% | 3.9% |
| Hobart | +7.9% | 4.4% |
| Brisbane | +6.4% | 3.4% |
| Adelaide | +5.8% | 3.6% |
| Melbourne | +5.0% | 4.0% |
| Sydney | +4.8% | 3.3% |
| Canberra | +3.2% | 4.3% |
Darwin's 11.4% annual rental growth is the highest of any capital and is driven by genuine occupier demand rather than speculative activity. The city's tight vacancy and sustained employment base have made it a landlord's market for three consecutive years. Perth's 8.0% rental growth is the second highest but note the contrast with yield: Perth's yield sits at only 3.9% despite that growth, reflecting the scale of the capital appreciation that preceded 2026's value correction and pushed the denominator up sharply.
Canberra is the weakest rental growth market at 3.2%, consistent with its broader softening as public sector employment conditions have stabilised after several years of expansion.
Cotality notes explicitly in the September 2026 data that yields remain well below a cost-neutral level given current holding costs. That observation deserves direct examination. At mortgage rates of approximately 5.5% to 5.8%, a gross yield of 3.8% on an investment property means the rental income covers roughly two-thirds of the interest cost, before any other expenses are counted.
The net yield after property management fees of approximately 8%, council rates, landlord's insurance, maintenance, and vacancy allowance will typically be 1.0% to 1.5% lower than the gross figure. A property returning 3.8% gross is likely returning 2.3% to 2.8% net. Against a borrowing cost of 5.7%, the negative gearing gap is approximately 3 percentage points.
That gap narrows to approximately 2.2 to 2.5 percentage points in the stronger-yielding markets, such as Darwin, Hobart, and Regional WA. For investors on higher marginal tax rates, the after-tax cost of negative gearing is lower, but it does not disappear. Australian investment property in 2026 remains a capital-growth-plus-tax-benefit proposition for most buyers, not a cash-flow-positive play.
To make the numbers concrete, consider a worked example using the national gross yield of 3.8%.
Example: $750,000 investment property at 80% LVR
Purchase price: $750,000
Loan (80% LVR): $600,000
Deposit + costs: approximately $165,000 to $175,000
Gross rental income at 3.8%: $28,500 per annum ($548 per week)
Interest at 5.7% on $600,000: $34,200 per annum
Interest shortfall: $5,700 per annum
Add property management (8%): $2,280
Add rates, insurance, maintenance (estimated): $4,500
Total cash outflow above rent: approximately $12,480 per annum ($240 per week)
At a marginal tax rate of 37%, the tax deductibility of the loss reduces the after-tax cash requirement to approximately $7,860 per annum, or $151 per week, before principal repayments.
That $151 per week out-of-pocket figure, at a 37% marginal rate, is the carrying cost of the investment above what the tenant covers. It is manageable for many investors, but it requires genuine cash flow discipline and a view on long-term capital growth that justifies that ongoing cost.
For Mankin Finance clients considering investment property in the Macarthur corridor, the rental picture in 2026 is more favourable than it has been in several years. Gross yields on houses in Leppington, Edmondson Park, and Campbelltown range from approximately 3.5% to 4.2% depending on property type, configuration, and specific street. Three-bedroom houses in Campbelltown are regularly achieving $650 to $720 per week, against purchase prices in the $600,000 to $680,000 range, producing gross yields of 5.0% to 5.5% in some pockets.
Rental vacancy in south-west Sydney remains very low. The region has a structural accommodation shortage driven by population growth in the growth corridor that has not been matched by sufficient rental supply. That tight vacancy underpins rental growth and insulates investors from extended periods without tenants.
The combination of improving yields, tight vacancy, and a buyer's market that allows more negotiation on purchase price means the entry conditions for investment in the Macarthur region are better in late 2026 than they were in 2025. Talk to Michael about structuring an investment loan for the current market before making any purchase decision.
The two drivers of yield improvement, rising rents and falling property values, could plausibly continue for some time. Cotality's September 2026 data shows national rent growth running at 5.7% annually and dwelling values still declining. If that combination persists through 2026 and into 2027, yields will continue to edge upward. The risk to the yield improvement story is a sharp rate cut cycle that reignites buyer demand and pushes values back up faster than rents can respond. That scenario remains the key variable to monitor.
A 3.8% gross yield is the highest national figure since September 2019 and a meaningful improvement from early 2024's sub-3.5% readings. In absolute terms however, against current mortgage rates of approximately 5.5% to 5.8%, a 3.8% gross yield means the property is cashflow negative before management fees, rates, insurance and maintenance are added. The net yield after those costs will likely be around 2.3% to 2.8%, creating a negative gearing gap of around 2.5 to 3 percentage points relative to the cost of the debt. For investors comfortable managing that gap with a long-term capital growth view, the improving yield is genuinely positive. For those requiring cash-flow neutrality, most markets at 3.8% gross do not yet deliver it.
Based on Cotality's September 2026 data, Darwin leads all capitals with a gross yield of 6.3%. Hobart and Canberra sit at around 4.3% to 4.4%. Melbourne is at 4.0% and Perth at 3.9%. Among regional markets, Regional NT yields approximately 7.9%, Regional WA around 5.1%, and Regional Tasmania approximately 4.4%. The lowest yields are Sydney at 3.3% and Brisbane at 3.4%. Higher-yielding markets carry trade-offs including lower liquidity and more volatile economic bases. The best yield for any given investor depends on their overall loan structure, tax position, and risk tolerance.
Whether you are buying your first investment property in Campbelltown or refinancing an existing portfolio to improve your cash flow position, Michael can walk you through the numbers. A 30-minute conversation will tell you what you can borrow, what rate structure suits your situation, and whether the timing makes sense for your goals.
