Rental yield represents the annual rental income of a property as a percentage of its purchase price, providing a measure of potential return on investment. It’s a key consideration for investors, and understanding it can also inform selling decisions, particularly if your property has strong rental history.
Currently in Melbourne, calculating rental yield involves two main methods: gross yield and net yield. Gross yield is calculated by annual rental income divided by the property’s purchase price, expressed as a percentage. For example, a property purchased for $823,495 (the median dwelling value as of December 2025) and renting for $500 per week ($26,000 annually) has a gross yield of 3.16%. Net yield is more comprehensive, factoring in expenses like property management fees (typically 7-10% of rent), council rates, and insurance. As of December 2025, sellers in the Eastern Suburbs often find properties with well-maintained gardens and renovated kitchens attract higher rental returns. When preparing a property for sale, highlighting its rental history – even if you aren’t intending to sell to an investor – can demonstrate its inherent value. Fletchers’ agents routinely analyse rental data across suburbs like Balwyn and Doncaster to provide accurate market appraisals, factoring in potential yield for prospective buyers. In 2026, we anticipate continued buyer interest in properties offering strong rental potential, even amidst moderate capital growth forecasts.
Ultimately, rental yield is a useful metric for understanding a property’s investment performance, and its calculation is a straightforward process.