Highlights

  • Cotality's October index puts the national gross rental yield at 3.85%, the highest since August 2019, as rents keep rising while values slip from their March peak.
  • The timing matters: from 1 July 2027, rental losses on many investment homes bought after Budget night will no longer reduce tax on wages.
  • Cotality's Home Value Index for October reports a national gross rental yield of 3.85%.
  • Gross yield is annual rent divided by property value, before costs such as rates, insurance, repairs and interest.

National gross rental yields have climbed to 3.85%, the highest since August 2019, as rents rise and values ease. With negative gearing limits starting in July 2027, the rent a property earns is drawing closer scrutiny. Australian landlords are now earning more rent for every dollar of property value than at any time in more than seven years.

What the October numbers show

Across the capital cities, yields range from 3.4% in Sydney to 6.5% in Darwin. That gap is wide in dollar terms. On a $1 million property, a 3.4% gross yield equals $34,000 a year in rent, while 6.5% equals $65,000. The lift is coming from both sides of the equation. National rents rose 0.3% in September and 5.5% over the year, while the national median value of $899,236 fell 1.1% in the month and was flat over 12 months. Cotality's data also shows national values are 5.2% below their March 2026 peak.

Why rents are rising while values fall

Vacancy is loosening, though from a very tight base. Cotality reports national vacancy of 2.0% in September, up from a record low of 1.5% in February 2026. Rising vacancy can eventually slow rent growth. If that happens, yields would only keep climbing if values continued to fall. Cotality's report says the Budget's negative gearing and capital gains tax changes have reduced investor demand, with a smaller effect on owner-occupiers. One reading of the data is that fewer investors bidding for property can weigh on prices well before it changes the rent paid on homes already leased. That combination pushes gross yields up.

Why the negative gearing changes put yield in focus

The Treasury Laws Amendment (Tax Reform No. It limits negative gearing for residential property acquired after 7:30pm AEST on 12 May 2026, with the limits applying from 1 July 2027. The test turns on when contracts were exchanged, not when they settled. Properties held before Budget night are grandfathered, and new builds are excluded. For a post-Budget purchase of an established dwelling, a rental loss will only offset residential rental income or residential capital gains, with unused amounts carried forward. It will no longer reduce tax on salary or wages. The limits do not reach every owner. Complying superannuation funds and widely held unit trusts sit outside them, so the shift is most relevant to individual investors buying established homes. When a deduction against wages can no longer soften a cash shortfall, the rent a property earns relative to its holding costs carries more weight. She also flagged pressure on some existing landlords: "For some [mum-and-dad investors], it will mean they have to sell."

Hypothetical example: the same loan at two yields

Hypothetical example: an investor buys an established $800,000 property after Budget night, borrowing $640,000 interest-only at an assumed rate of 6.5%. At the national gross yield of 3.85%, rent is $30,800 a year. That leaves a $10,800 shortfall before rates, insurance, management fees or repairs.