Cotality’s June Housing Value Index shows Australia’s residential market continuing its measured ascent, with national dwelling values advancing 0.5 per cent through May and 3.3 per cent over the past year. While such figures restore confidence after the brief 2024 slow down, landlords should temper expectations: growth is now aligned with wages, not the double-digit surges that dominated pandemic recovery.
Investors also enjoy modestly firmer rental yields, averaging 3.7 per cent across the capitals and 4.4 per cent regionally, as rents outpace mortgage costs but at a slower clip than last year’s spike. Cotality says weekly advertised rents rose 6.1 per cent annually, down from 9.4 per cent six months ago, signalling easing pressure on tenants without eroding real income returns.
Vacancies remain historically tight at 1.1 per cent nationally, yet incremental stock is beginning to surface in Melbourne and Sydney’s middle-ring suburbs as large apartment projects reach completion. Landlords counting on perpetual rent hikes should monitor local pipelines; a single percentage-point increase in vacancy can flatten rental growth for an entire postcode.
At city level, Perth and Brisbane remain yield standouts, supported by interstate migration and limited new supply. Adelaide offers comparable cash flow with lower entry prices, though smaller block sizes temper future redevelopment upside. Conversely, Hobart’s yield premium has narrowed sharply, prompting some owners to reassess renovation plans rather than chase higher asking rents.
Higher borrowing costs still frame every investment decision. Although the Reserve Bank’s May cut trimmed variable rates by 25 basis points, most investors are servicing loans 220 basis points above pre-pandemic levels. Cotality calculates that an 80 per cent-LVR purchaser in today’s market allocates approximately 35 per cent of gross rental income to interest, compared with 29 per cent a year ago.
Regulatory momentum also weighs on strategies. Queensland’s land-tax thresholds are frozen, while New South Wales continues to tighten minimum energy standards for rentals built before 2005. These policies raise holding costs but can be mitigated by proactive upgrades: replacing halogen down-lights with LEDs, boosting ceiling insulation and installing efficient heat-pump hot-water units typically lifts NABERS ratings and improves tenant retention.
Insurance is another moving target. Extreme weather claims pushed premiums up an average 13 per cent nationally during 2024–25. Insurers now reward preventative maintenance, so annual roof inspections, cleared gutters and documented smoke-alarm testing can shave meaningful dollars from renewals. Keeping receipts and photographic evidence also strengthens positions should a claim arise mid-tenancy.
Looking ahead, Cotality’s forward indicators show new listings easing into winter, while fixed-term leases signed at the height of last year’s rent surge will gradually re-price at more moderate levels. Landlords who balance fair increases with prompt maintenance are likely to see fewer vacancies and lower turnover costs than those who chase every last dollar.
Portfolio choices, therefore, hinge on disciplined cash-flow modelling rather than speculative capital gaming. Sensible leverage, scheduled refurbishments and transparent communication with tenants underpin resilient returns, whatever the macro backdrop.
Gross rental yields nationally
