Australia’s mid-year Cotality Housing Value Index offers welcome news for landlords: income streams are stabilising while capital values resume measured growth. National dwelling prices edged 0.6 per cent higher in June and 1.4 per cent for the quarter, leaving the median property at $837,586. Gross rental yields now hover near 3.7 per cent nationally, 3.5 per cent across the capitals and 4.4 per cent in regional markets. Those figures, although modest in isolation, finally outpace many variable loan rates after two Reserve Bank cuts and futures markets pricing the cash rate near 3.1 per cent by December.
Rental momentum, however, is cooling. The national rental index rose just 1.3 per cent through the June quarter – the gentlest second-quarter rise since 2020 – as affordability limits take hold. Vacancy still sits close to one per cent, yet tenants devote roughly one-third of pre-tax income to rent. That backdrop explains why Darwin’s 2.9 per cent quarterly increase and Brisbane’s two per cent gain stand out; most other markets posted rises below one per cent. Asking for heftier increases now risks breaching the practical ceiling many households can bear.
Demand dynamics are shifting. Net overseas migration has retreated to pre-pandemic norms as temporary residents depart, easing competition for leases. Meanwhile, new housing supply remains tight. Building approvals sit well below the 20,000-a-month level needed to meet national targets, and advertised listings are almost six per cent lower than a year ago. With borrowing costs projected to fall further, purchase activity among investors could accelerate, yet stock constraints will temper any sudden correction in yields.
Performance varies sharply by region. Perth and Brisbane continue to deliver the strongest combined growth in both rents and values, each adding roughly two per cent over the quarter. Melbourne’s sluggish rental uplift of 0.7 per cent and its 0.4 per cent annual price decline highlight how oversupply in certain inner-city pockets still weighs on returns. Across the regions, Western Australia and Queensland record the highest gross yields – 5.9 per cent and 4.4 per cent respectively – but those returns come with higher maintenance and insurance costs in cyclone-prone or remote areas.
What, then, is the most effective strategy? First, align lease renewals with rate-review cycles. If your repayments fall next quarter, consider passing on only a fraction of that saving. A modest rise today may foster loyalty, reduce vacancy risk and cut reletting fees tomorrow. Second, invest in energy-efficient upgrades before summer. Running costs now rank alongside rent in tenant decision-making. Third, monitor lending policy. Regulators remain vigilant; loans greater than six times income still comprise only a small share of new borrowing. Should debt levels climb, prudential tightening could constrain investors’ expansion plans.
Finally, interrogate your own assumptions. Does a $20-per-week increase truly outweigh the risk of a dependable tenant departing? Would a fresh coat of paint, smart-lock entry or rooftop solar rebate yield a stronger long-term return? In a market where yields and values advance steadily rather than spectacularly, conscientious stewardship becomes the differentiator. Responsible rent settings, proactive maintenance and empathy for household budgets safeguard not only occupancy but also reputational capital.
Lower rates may lift gross returns through 2025, yet society’s tolerance for sharp rent hikes is waning. By balancing income growth with tenant wellbeing, landlords can capture today’s advantages without fuelling tomorrow’s regulation.
Gross rental yields nationally
Sydney 3.1%
Melbourne 3.7%
Brisbane 3.7%
Adelaide 3.7%
Perth 4.3%
Hobart 4.4%
Darwin 6.5%
Canberra 4.1%
National 3.7%