Rental yield is an important concept that property investors and first-home buyers looking to invest should understand. We are here to explain the ins and outs of rental yield, to help you get awesome returns from your investments (or future investments).

READ ON if you’re looking to invest in Sydney and want to learn more about rental yield!

What is Rental Yield?

Simply put, gross rental yield is your rental income expressed as a percentage of your property’s value.

It can be calculated like this:

Gross Rental Yield = (Annual Rental Income/Property Value) x 100

If maths is not your strong suit, don’t worry! We are here to make your property journey simpler.

Rental yield is an important factor that investors consider before purchasing a property, as it helps reveal the best investment opportunity.

Imagine you have a property valued at $800,000 in a suburb with a 5% rental yield. Your annual income will be $40k! So, the more rental income you receive, the the higher your rental yield.

For property investors, you can identify areas with high and/or increasing rental yield to ensure you get the best returns on investment to enjoy a positive cash flow.

It can help you to assess your investment property and see how it compares to others in the area. If we’ve piqued your interest, you can learn more about the rental market by clicking here.

Sydney’s Rental Yield

Sydney is a bright and bustling city in New South Wales, Australia, with a population of 5.231 million (Greater Sydney as of 2021), projected to grow to 6.1 million by 2041. There is definitely a reason for the phrase ‘Generation Rent’, with about 35.9% of Sydney’s population living in rental accommodation.

Sydneysiders are LOVING apartment life, opting to rent in places with good access to jobs, transport and facilities, rather than buying a house in locations that are further away.

The median listing price for houses in Sydney is $1.6 million, with a $770 per week median rent and a 2.5% rental yield. For apartments, the median price is much lower at $806k, with $704 rent per week and a 4.5% rental yield.

Depending on your goals, this could mean that you may be better off investing in apartments, as they have a higher yield compared to houses.

Supply & Demand in Sydney’s Rental Market

A lot has been going on in Sydney’s rental property market. Demand is rising and supply is dropping. According to Domain, buyer demand in Greater Sydney has increased by 9.1%, and across all capital cities, data shows that the proportion of available rental properties has dropped below 2%.

There are simply not enough properties available to meet the extremely strong demand in Sydney, as renter demand has skyrocketed.

International students, permanent residents and Australian citizens have returned to Sydney, increasing the demand for rentals and boosting gross rental yields.

Because of this, Sydney’s rental market has tightened. The lack of supply with increased competition for rentals saw Sydney’s vacancy rates drop to 1.2% in March, the lowest level in 16 years!

Currently, the vacancy rate is sitting at 1.4% (May 2024), with rental supply plummeting over the past year in every capital city.

This means that there are a lot more people looking to rent compared to the supply of properties available, leading to rising rent prices, higher yields and happy investors!

The Trend in Sydney’s Rental Yield

Simon Pressley, head of research at Propertyology, states “We are seeing rental prices all over Australia go through the roof.”

However, Mr. Pressley warned investors against chasing the highest rental yield in Sydney, noting they should consider potential capital growth which could deliver greater returns and holding costs.

Property investment strategist Lloyd Edge states, “if you don’t get a good yield, then you won’t have good cash flow and you’ll get maxed out on negative gearing.” So don’t forget to check your rental yield!

In recent years, Sydney’s gross rental yields have been mostly steady, sticking around 3.8% for units and 2.5% for all houses, according to SQM Research. 

Sydney’s Best Rental Yields

As an investor, you’ll want to know about the best Sydney rental yield by suburb.

In Sydney NSW, some of the suburbs with high rental yield for units include:

1. Fairfield: 6.1%
2. Merrylands: 6.1%
3. Parramatta: 6%
4. Liverpool: 5.9%
5. Sydney CBD: 5.8%
6. Wolli Creek: 5.8%
7. Campbelltown: 5.6%
8. Schofields: 5.6%
9. Rockdale: 5.5%
10. Villawood: 5%

Fairfield and Merrylands, nestled in Sydney’s western suburbs, top the list for high rental yield investments amidst the city’s soaring property market. Their appeal lies in their accessibility to essential amenities like schools and transport hubs, combined with relatively affordable property prices compared to other Sydney locales.

The rental market in these areas flourishes with a diverse range of property types, catering to varied tenant demographics, from families to young professionals. This diversity, alongside a steady demand for rental properties, contributes to the stability and growth potential of rental yields.

Investors eyeing these suburbs can capitalise on the promise of solid returns, backed by both rental income and the prospect of long-term capital appreciation, making Fairfield and Merrylands undisputed leaders in Sydney’s competitive rental landscape.

Liviti’s Top Rental Yield Sydney

Here’s the rundown on Liviti’s Top 3 Projects in Sydney:

1. The Crescent, Fairfield: 6.1%
2. The Gladstone Village Merrylands: 6.1%
3. Jasmine Schofield Gardens: 5.6%

The Crescent, Fairfield – Top Rental Yield SydneyThe Crescent, Fairfield has an average rental yield of 6.1%, offering luxurious 2 & 3-bedroom apartments. Crescent is centrally located with great proximity to public transport, Parramatta CBD, and open spaces such as Western Sydney Parklands.

Fairfield has an amazing global dining scene, as well as fantastic entertainment options for families.

The Gladstone Village, Merrylands – Top Rental Yield Sydney

The Gladstone Village, Merrylands has an average rental yield of 6.1%, so investors can expect great returns from these premium apartments.

The Gladstone Village offers a combination of studio, one, two and three-bedroom apartments, providing the perfect option for all lifestyles, from first home buyers to investors, families and downsizers. It also features spacious interiors, with open-plan layouts, generous balconies and quality finishes that tenants can’t help but love.

Jasmine Schofield Gardens – Top Rental Yield Sydney

Jasmine Schofield Gardens stands out as a premier choice, offering an impressive 5.6% rental yield and an ideal blend of quality, value, and prime location. Situated just minutes from Sydney’s North West business hub, this latest addition to the master-planned Schofield Gardens community is surrounded by green open spaces, creating a fresh and eco-friendly environment.

The Jasmine Apartments are designed with eco-conscious features such as LED lighting, energy-efficient appliances, natural airflow, and thermal windows that mitigate UV impacts. Residents can indulge in a rich lifestyle with convenience and comfort, making Jasmine Schofield Gardens the perfect spot for ultimate relaxation and entertainment.

We hope with all this talk about the rental market, yields and investment properties, you now have a better understanding of how to get the best return on investment and secure the right opportunity.

Looking for some guidance? Contact Liviti Today to kick-start your investment journey and book a consultation!

Frequently Asked Questions (FAQs)

1. How to calculate rental yield?
   To calculate rental yield, divide the annual rental income by the property’s value and multiply by 100. For example, if your Sydney rental yield is $30,000 annually on a $600,000 property, the rental yield would be 5%.
2. What is a good rental yield?
   A good rental yield varies by location and your goals for that property. In Sydney, a good rental yield is typically around 4-5% for units, which is higher than the average rental yield for houses.
3. How to work out rental yield?
   Working out rental yield involves dividing the annual rental income by the property’s purchase price and multiplying by 100. This helps identify high yield property investment opportunities in suburbs with high rental demand.
4. What is rental yield?
   Rental yield is the annual rental income expressed as a percentage of the property’s value. It’s a key metric to identify the best rental yield suburbs and high yield property investments.
5. How do you work out rental yield?
   To work out rental yield, use the formula: (Annual Rental Income / Property Value) x 100. For example, a property with a high rental yield in suburbs like Fairfield or Merrylands can provide substantial returns.
6. What is the rental yield?
   Rental yield measures the annual rental income relative to the property’s value. Sydney rental yields vary, with some of the highest rental yield suburbs providing exceptional returns.
7. How do you calculate rental yield?
   Calculate rental yield by dividing the yearly rent by the property’s value and multiplying by 100. This method helps identify the best rental returns in Sydney and other high rental yield suburbs in NSW.
8. What is a good rental yield in Australia?
   In Australia, a good rental yield is around 4-6%. Sydney’s rental yield by suburb can vary, with some areas offering higher returns than others.
9. How do I calculate rental yield?
   To calculate rental yield, divide the annual rental income by the property value and multiply by 100. This calculation is essential for finding the best rental yields in Australia.
10. How is rental yield calculated?
    Rental yield is calculated by dividing the annual rental income by the property value and multiplying by 100. This helps determine the highest rental yield suburbs in Sydney.
11. What does rental yield mean?
    Rental yield represents the annual return on a property investment, expressed as a percentage of the property’s value. It’s crucial for identifying best rental yield Australia.
12. What is good rental yield?
    A good rental yield is generally above 4%. In Sydney, some of the best rental return suburbs offer yields exceeding 4.5%, making them attractive for investors.
13. How to work out yield on rental?
    To work out the yield on rental, divide the annual rent by the property value and multiply by 100. This helps investors find the best investment properties in Sydney.
14. How to calculate the rental yield?
    Calculate rental yield by dividing annual rental income by the property’s purchase price and multiplying by 100. This formula is key for determining the best rental returns in Australia.
15. How to work out the yield on rental property?
    To work out the yield on a rental property, use the formula: (Annual Rent / Property Value) x 100. This helps identify the highest yield suburbs and the best rental yield suburbs in NSW.
16. What is a rental yield?
    Rental yield is the annual rent expressed as a percentage of the property’s value. It’s a vital metric for finding high rental yield suburbs in Sydney and beyond.
17. How do you calculate the yield on a rental property?
    Calculate the yield on a rental property by dividing the annual rent by the property’s purchase price and multiplying by 100. This method helps investors pinpoint high-yield property investments.
18. How to calculate a rental yield?
    To calculate a rental yield, divide the annual rental income by the property’s value and multiply by 100. This calculation helps identify the best rental returns Sydney offers.
19. How to calculate the yield on rental property?
    Calculate the yield on the rental property using the formula: (Annual Rent / Property Value) x 100. This helps investors find the best rental yield suburbs in Sydney.
20. What rental yield is good?
    A good rental yield is typically around 4-6%. Sydney suburbs with the highest rental yield often exceed this range, offering excellent investment opportunities.
21. How to calculate rental yield in Australia?
    To calculate rental yield in Australia, divide the annual rental income by the property value and multiply by 100. This helps identify the best rental yield Australia has to offer.
22. How to calculate the rental yield on a property?
    Calculate the rental yield on a property by dividing the annual rent by the property’s value and multiplying by 100. This method is useful for finding high rental yield suburbs Australia-wide.
23. How to calculate the rental yield on the property?
    To calculate the rental yield on the property, use the formula: (Annual Rental Income / Property Value) x 100. This helps determine the best rental returns in Sydney.
24. How to figure out rental yield?
    Figure out rental yield by dividing the annual rental income by the property’s value and multiplying by 100. This helps investors find the highest-yield suburbs in NSW.
25. What is a good rental yield in Australia?
    In Australia, a good rental yield is around 4-6%. Sydney rental yields can be particularly attractive, especially in high rental yield suburbs.