Notting Hill in Melbourne now delivers an indicative gross rental yield of 8.0% for units — the highest of any suburb on a list of 67 capital city suburbs where returns exceed 6%, according to realestate.com.au, published 10 November 2026. Darwin's Berrimah tops the house category at 8.5%, while the national average gross yield sits near 4%. The shift follows May's federal budget changes to capital gains tax and negative gearing, which realestate.com.au senior economist Anne Flaherty says have made the yield side of things "a bit more important" to investors weighing where to deploy capital.
The Budget Reform Behind the Yield Pivot
Two changes sit behind the data. From July next year, negative gearing deductions — where investors offset rental losses against other income such as wages — will be limited to new homes only, removing the tax shield that previously made loss-making established properties palatable while investors waited for capital growth. Separately, the capital gains discount that applied to assets held longer than 12 months has been replaced with an inflation indexation model, reducing the long-term tax advantage of buy-and-hold strategies built purely around price appreciation.
For broader market context, see Bubblepedia's historical Australian property bubble analysis.
The practical effect, according to the latest PropTrack Terri Scheer Investor Report 2026, is a measurable swing in enquiry behaviour: a greater share of investors are now enquiring about higher-yielding properties than before the budget changes, while enquiries for lower-yielding stock have fallen. Ms Flaherty frames it simply — a property generating stronger rental income is becoming the more attractive proposition once the tax offset for holding a loss-making asset has narrowed.
Darwin Dominates, Sydney and Melbourne Supply the Volume
Darwin contributes more high-yield suburbs than any other capital — 23 unit suburbs and eight house suburbs above the 6% threshold — a result of the city carrying the lowest median property values of any capital at $638,000 alongside the third-highest median rent nationally at $740 a week. Karama units return around 8.0%, Leanyer sits at 7.6% and Rapid Creek delivers 7.1%. JH Team Real Estate principal Jacob Reynolds attributes this to Darwin's historically cheap entry prices combined with comparatively high local wages supporting rents.
Sydney's standout is inner-city Ultimo at 7.1%, with Harris Park and Warwick Farm near 6.0–6.2% in the city's west. Starr Partners agent David Lao points to Harris Park's stock of 1970s-built apartments, often priced between $400,000 and $500,000, as the driver of strong rental returns relative to neighbouring Parramatta. Melbourne's list is led by Notting Hill at 8.0%, Travancore at 7.7% and Carlton at 7.5%, with Docklands real estate agent and Lucas managing director Dylan Emmett noting that one-bedroom units priced from $300,000 to $350,000 can rent for roughly $580 a week in a market where ABS data shows two-thirds of Docklands properties are investor-owned. Perth's Northbridge and East Perth sit between 6.4% and 6.5%, and Canberra counts seven suburbs above 6%, including Gungahlin and Braddon.
Sixty-seven capital city suburbs now deliver gross rental yields above 6%, more than double the national average of roughly 4%, with Darwin alone contributing 23 unit suburbs to that list — more than any other capital city.
Yield vs Growth: What REAStats Suburb Data Shows
The yield story sits alongside a separate growth story playing out across REAStats suburb tracking, and the contrast is instructive for investors choosing between cashflow and capital appreciation strategies under the RBA's current 4.85% cash rate. Mandurah in Western Australia carries a $550,000 median price, 10.5% annual growth and a 56% auction clearance rate — a profile that pairs an accessible entry point with strong recent capital gains. Dandenong in Victoria, by comparison, has a $680,000 median, just 2.3% annual growth, a 40-day average time on market and a 56% clearance rate, illustrating how two affordability-tier suburbs in different states can produce very different outcomes for an investor prioritising growth over yield.
South Perth's 13.8% annual growth and 17-day sales cycle sit at the opposite end of the spectrum — a tightly held, fast-moving market where capital growth rather than rental yield is the dominant return driver. For investors now weighing the post-budget trade-off between cashflow and appreciation, cross-referencing REAStats suburb-level days on market and clearance rate data against the yield figures in the realestate.com.au analysis gives a fuller picture than yield percentages alone.
Capital City vs Regional Trade-Offs for Investors
The yield-chasing behaviour described in the realestate.com.au analysis mirrors a broader debate between capital city liquidity and regional affordability that has shaped Australian investor decisions for decades — context explored in REAStats' own capital city versus regional property investment comparison, which weighs vacancy rates, exit options and yield differentials across both market types. Investors acting on the budget-driven yield pivot should also weigh presentation and rental readiness; REAStats' property renovation quick fixes guide outlines the minor, high-ROI improvements that can lift achievable rent in affordable unit stock of the kind dominating Darwin, Melbourne and Sydney's high-yield suburb lists.
What the Data Signals Next
For agents operating in the 67 identified suburbs, the practical implication is a widening pool of yield-motivated buyers who will scrutinise rental comparables alongside sale comparables when assessing a purchase. For vendors holding affordable units in suburbs such as Harris Park, Docklands or Northbridge, the current enquiry pattern described in the PropTrack Terri Scheer Investor Report suggests sustained investor demand even as overall market conditions soften under the RBA's 4.85% cash rate. Buyers entering this segment should treat the quoted yields as indicative rather than guaranteed — actual returns depend on the price paid and rent achieved — and weigh them against the growth-versus-cashflow trade-offs evident in suburb pairs like Mandurah and Dandenong before committing capital.
