Daniel Butkovich, Property Journalist
First published 10 Nov 2026, 4:15pm
With both affordable property prices and high rental yields, these suburbs of Australia's largest cities will be on the radar for investors seeking strong cashflow.
Suburbs with high rental yields are back in the spotlight for property investors, who have pivoted to high-cashflow properties following this year’s federal budget in May.
Changes to the capital gains tax discount and the abolishment of negative gearing for established homes have caused a reduction in investor demand, but not all investors are fleeing the market.
Many have switched focus to properties and areas with higher rental returns, with the end of negative gearing making it less attractive to hold a loss-making investment while waiting for long-term capital growth.
Jump ahead to see the top suburbs for rental yields in:
Previously, investors whose expenses exceeded rental income, resulting in a loss, could deduct that loss from other income, such as wages. Starting from July next year, that tax break will be limited to new homes only.
The other major budget change was the abolishment of capital gains discount that investors could claim if they held a property for more than 12 months, which has been replaced by an inflation indexation model.
Darwin suburbs have some of the highest rental returns of all the capitals. Picture: realestate.com.au/buy
The changes have shone the spotlight on high-yielding properties, which now hold greater appeal for investors, according to realestate.com.au senior economist Anne Flaherty.
“Now that the capital gains tax discount has been reduced, the yield side of things will become a bit more important,” she said.
“A property that’s going to get a higher rental income is going to become more attractive.”
New data shows the budget changes have already shifted investor behaviour, with high-yield properties emerging as an increasingly popular sector of the market.
Source: PropTrack Terri Scheer Investor Report 2026
A greater share of investors have been enquiring about properties with higher rental yields than before the budget and fewer investors have enquired about lower-yielding properties, according to the latest PropTrack Terri Scheer Investor Report .
Gross rental yields measure the total annual rental income received from a property before tax, as a percentage of the property’s purchase cost. Generally, the higher the yield, the greater the cash flow.
The average gross rental yield at the national level is about 4% – a figure that has increased in recent months as prices have softened and rents have risen.
A typical unit in Carlton would have an indicative rental yield of 7.5%, based on median sale prices and median rents. Picture: realestate.com.au/buy
Suburbs with the highest rental yields in the country tend to be found in regional Australia, with remote mining towns often topping the list for rental yields, which can be as high as 12% in some areas.
But for investors keen on buying into a large city with a diverse economy, there are plenty of suburbs where rental yields are high, and property prices tend to be affordable too.
Analysis of realestate.com.au data has uncovered 67 capital city suburbs with rental yields of 6% or more.
The analysis is based on median sale prices and median weekly rents – the exact rental yield for an individual property will depend on the actual price paid and the weekly rent received.
Units tend to have higher rental yields than houses – in fact, 59 of the suburbs with 6%-plus rental yields were for units, with only eight capital city suburbs having rental yields that high for houses.
High density areas of Sydney, Melbourne, Perth and Canberra had some of the highest unit yields, which came down to typical property values in these suburbs, Ms Flaherty said.
“Inner city apartments are still pretty competitively priced, especially in a city like Melbourne where there’s a high supply of units,” she said.
“We also know there’s a dire shortage of rental properties in inner city markets, which means rents have risen quite rapidly in the inner cities and that is helping to achieve higher rental prices.”
Inner-city Ultimo has one of the highest rental yields for units of all Sydney suburbs. Picture: realestate.com.au/buy
Suburbs with high rental yields include Ultimo in inner Sydney, which has an indicative rental yield for units of 7.1%, as well as Harris Park and Warwick Farm in the city’s west where unit rental yields are about 6%.
Real estate agent David Lao of Starr Partners said the lower prices of apartments in Harris Park relative to neighbouring Parramatta contributed to stronger rental returns.
“It’s mainly because of the value of the apartments in Harris Park,” he said. “Most of them are 1970s builds, and they're close to the train station.”
“A $450,000 apartment might rent for between $530 and $550 per week. The demand is high because it’s very affordable for a two-bedroom apartment.”
Affordable 70s-era apartments in Harris Park that can be purchased for under $500,000 still deliver strong rental returns, according to local real estate agents. Picture: realestate.com.au/sold
He said tax changes in the federal budget meant more investors were now focused on finding affordable properties that still delivered high rental returns.
“Anything that’s in that $400,000 to $500,000 range, that’s where the investors are at the moment,” he said.
Notting Hill in Melbourne has the city’s highest unit rental yield at 8%, while Carlton ’s yield is 7.5%, Southbank units yield 7.1% and Docklands apartments return 6.7%.
Docklands real estate agent and Lucas managing director Dylan Emmett said affordable prices and demand from a range of renters helped deliver higher rental yields in the inner-city suburb.
“The affordability around buying is what creates a good yield,” he said.
“You can get one bedroom units for $300,000 to $350,000 and you can rent them out for $580 per week.”
“It's in high demand from people starting off in Melbourne, whether they’re moving from interstate, regional or overseas.”
Units in Docklands typically have higher rental returns than in other suburbs. Picture: realestate.com.au/buy
Mr Emmett said yields were a major factor driving people to invest in Docklands, where ABS data shows two thirds of properties were owned by investors.
“There's no doubt investors are looking at the yields and seeing those as favourable,” he said. “A high yield is going to make that decision to invest a little easier.”
Inner Perth suburbs such as Northbridge , East Perth , Wembley and Glendalaugh have rental yields between 6.1% and 6.5%.
There were seven Canberra suburbs where investors can find yields above 6% for units, including Gungahlin , Belconnen and Braddon .
Darwin had 23 suburbs with 6%-plus rental yields for units, and eight for houses – more than any other capital.
The city has the most affordable property prices of all the capitals, with a median home value of $638,000, but the third highest median rent at $740 per week.
High-yielding Darwin suburbs include Karama where units return about 8%, Leanyer with a rental yield of 7.6% and Rapid Creek at 7.1%. For houses, Zuccoli , Muirhead , Malak and Karama all had yields above 6%.
There were 23 suburbs of Darwin where typical unit rental yields were above 6%. Picture: realestate.com.au/buy
Darwin real estate agent and JH Team Real Estate principal Jacob Reynolds said the city's relatively high rental yields were primarily a result of purchase prices prices being lower than the other capitals, but also strong rental demand amid a shortage of supply.
“Darwin historically has always had pretty high rental yields,” he said. “We’re currently the cheapest market in the country but we also have really high wages here.”
Mr Reynolds said units in large apartment blocks offered considerable value for investors and were often priced below replacement value, while recently-developed suburbs attracted strong rental demand for houses.
“Generally the newer suburbs, such as Zuccoli and Johnston, attract people that want more modern properties,” he said.
“They also attract retiree investors who just want cashflow and aren't too worried about growth.”
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While investors might often find that high rental comes at the expense of capital growth, and vice versa, Ms Flaherty said it was possible to find areas to invest in that offered both, such as in areas where population growth was outpacing home supply.
“The middle ring suburbs in Perth are a good example, where we have a massive shortage of homes, rents have risen rapidly and prices have risen rapidly too,” she said.
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