Falling property prices and rising rents are improving the income equation for property investors.
Australia’s median property price has now declined for five consecutive months, falling 3.6% over that period, according to Cotality.
At the same time, rents continue to rise. The national median rent increased 5.7% over the year to August.
Together, those trends have pushed the national gross rental yield to 3.8% – its highest level since 2019.
What higher yields mean
Gross rental yield measures annual rent as a percentage of a property’s value.
A higher yield can improve cash flow and help offset some of the pressure from higher mortgage rates.
- But yield is only part of the equation. Investors also need to consider:
- Loan repayments.
- Property management costs.
- Maintenance.
- Vacancy risk.
- Potential capital growth.
In other words, a high-yield property isn’t automatically a good investment.
Thinking about buying an investment property? Let’s look at how different loan structures and repayments could affect your cash flow.
