Rental yield in Sydney, explained
Rental yield tells you how hard your property is working. Here is how to calculate it, what counts as a good yield in Sydney, and how to lift it.
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The short version
- Gross yield = annual rent divided by property value, times 100.
- Net yield subtracts your running costs, and is the number that matters.
- Sydney yields are modest, growth and net return matter alongside them.
- Cutting vacancy and reviewing rent are the fastest ways to lift yield.
How to calculate rental yield
Gross rental yield is the annual rent as a percentage of the property’s value. The formula is: annual rent divided by property value, times 100. A property valued at $1,000,000 renting at $900 per week ($46,800 a year) has a gross yield of about 4.7%.
Net yield is more useful. It subtracts the running costs, management, council and water rates, insurance, strata and maintenance, before dividing by the value. Net yield is what actually lands in your pocket.
What is a good rental yield in Sydney?
Sydney yields are typically lower than regional markets, because property values are high. Investors here usually accept a modest yield in exchange for stronger long-term capital growth. The right number depends on the property and your strategy, so judge yield alongside growth, not on its own.
How to improve your rental yield
- Cut vacancy: every empty week drags your yield down, and it is the easiest leak to fix
- Review the rent at every renewal against the live market
- Make small, smart improvements that lift rent more than they cost
- Claim depreciation and every deduction you are entitled to
- Keep running costs and re-leasing costs down with a manager who retains good tenants
Yield versus growth
Chasing the highest yield can mean buying where prices grow slowly. In Sydney, the better play is usually a solid yield on an asset that also appreciates. We can help you read both for your property.
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