The short answer: Australian rental yields are the highest they've been since 2019, because rents kept rising while prices fell. Cotality's October 2026 Home Value Index, with results to 30 September, put the national gross yield at 3.85%. That's useful context if you hold or plan to buy an investment property back home, but gross yield is measured before costs and says nothing about growth. And when a lender tests whether you can afford the loan, it counts only part of the rent, and if you earn overseas, only part of your salary as well.
A few clients have sent me the yield headlines over the past month with the same question: does this make now a better time to buy an investment property from overseas? I can't answer that for anyone in a blog post. What I can do is explain what the figures actually measure, and how a lender will treat that rent when you apply from Singapore, Hong Kong or Dubai.
What Cotality's latest figures show
Cotality's October 2026 Home Value Index, published on 1 October with results to 30 September, recorded a sixth straight monthly fall in national home values. Values dropped 1.1% in September and now sit 5.2% below the record high set in March 2026 (Cotality, Australian housing values down for sixth straight month in September). For comparison, the August reading a month earlier had values 3.6% below the peak after five monthly falls (Cotality, Housing downturn spreads as 93% of capital city suburbs record winter value falls).
Rents went the other way. National rents were up 5.5% over the year to September, though the monthly pace eased to 0.3%, the smallest monthly rise since May 2025. With rents rising and values falling, the national gross rental yield reached 3.85%, the highest since August 2019 (Cotality, Home Value Index October 2026).
The regions sit higher than the capitals: 4.3% gross for the combined regionals against 3.7% for the combined capitals. Here's the picture for dwellings from the same release, with results to 30 September 2026.
| Capital city | Gross yield | Rest of state | Gross yield |
|---|---|---|---|
| Darwin | 6.5% | Regional NT | 8.0% |
| Hobart | 4.4% | Regional WA | 5.2% |
| Canberra | 4.4% | Regional SA | 4.4% |
| Melbourne | 4.1% | Regional Tas | 4.4% |
| Perth | 4.0% | Regional Vic | 4.3% |
| Adelaide | 3.6% | Regional Qld | 4.3% |
| Brisbane | 3.5% | Regional NSW | 4.2% |
| Sydney | 3.4% |
Why gross yield is only one line in the calculation
Gross yield is a year's rent measured against the property's value. Net yield is the more useful number for an owner, because it takes out the running costs: insurance, strata, agent fees, repairs, maintenance and the cost of vacant weeks (Westpac, How to calculate rental yield). None of those show up in a 3.8% headline, and neither do your loan repayments.
Cotality makes the same point itself. Its October release notes that even with yields rising, opportunities for neutral to positive cash flow remain low, given high holding costs including interest rates, insurance, maintenance and strata fees. The month before, Cotality's research director Tim Lawless said yields would need to rise substantially before rental income offsets holding costs while interest rates remain elevated (Cotality, Home Value Index September 2026).
Vacancy is also moving. The national vacancy rate reached 2.0% in September, up from a record low of 1.5% in February and the highest since January 2025, though still well below the pre-COVID decade average of 3.3% (Cotality, October 2026 release). A tight rental market is good for an owner. A loosening one is worth factoring in.
Then there's the price side of the fraction. Regional NT tops the table at 8.0%, and a lot of that comes from a low purchase price rather than an unusually high rent. Cotality's October tables put the Regional NT median house value at $454,119, about half the national dwelling median of $899,236. A low price lifts the yield figure without telling you anything about demand, liquidity or how values might move.
Yield also says nothing about capital growth, which for many investors is the larger part of the return over a long hold. We've covered how to weigh the two in Yield vs Growth: what Aussie expats should consider when buying property, so I won't repeat it here.
What a lender actually does with the rent
This is the part the headlines leave out. When a lender assesses whether you can service an investment loan, it doesn't use the full rent you expect to collect.
APRA, which supervises Australian banks, sets out its expectations in its practice guide on residential mortgage lending. In APRA's view, prudent serviceability policies apply a minimum haircut of 20 per cent on expected rental income, with larger haircuts where there's a higher risk of the property sitting empty. APRA also says lenders would normally place less reliance on third-party estimates of future rent than on actual rent received, and would account for property expenses such as strata (APRA, APG 223 Residential Mortgage Lending).
In practice, that means:
- The proportion of rent a lender counts is its own policy, and it varies from lender to lender.
- Rent on a property you're about to buy is usually supported by an appraisal, while rent on a property you already own can be backed by a lease and rental statements. Lenders can treat the two differently.
- Property running costs are accounted for in the assessment, either within your expenses or by reducing the rent counted.
So a higher yield helps the cash flow picture, but it only lifts your borrowing capacity by as much as the lender counts. Our guide to the Australian expat investment property loan covers the rest of how these loans are assessed.
The second discount for offshore borrowers
If you're paid in SGD, HKD or AED, there's a second discount on top of the rental haircut. APRA's guide says it's good practice for lenders to discount offshore income when assessing a borrower's capacity to service a loan (APRA, APG 223). Australian lenders call this foreign income shading, and how much they shade depends on the lender and the currency. We explain the mechanics in how Australian lenders assess your overseas salary.
Both discounts are set by lender policy. So the same purchase, with the same tenant and the same deposit, can produce a different borrowing figure depending on where the application goes. In our work, the lender choice often moves the number more than the yield on the property does.
There's also a cash flow point that sits outside the assessment. Your rent, repayments and running costs are all in Australian dollars, and your salary isn't. When the exchange rate moves, the real cost of topping up a negatively geared property moves with it. How you manage that currency exposure, and the tax side of the rental income, are conversations for our partners and your accountant.
Worth checking before you buy from overseas
- How your salary currency is shaded by the lender you're applying to.
- How much of the expected rent that lender counts, and whether it treats a new purchase differently from a property you already own.
- What the holding costs look like in Australian dollars when your income isn't.
- Whether the numbers still work if the property sits empty for a month or two.
- Whether the property suits your plans for growth as well as yield, not just the headline figure.
Frequently asked questions
What is the current rental yield in Australia?
Cotality's October 2026 Home Value Index, with results to 30 September, put the national gross rental yield at 3.85%, the highest since August 2019. The combined capitals sat at 3.7% and the combined regionals at 4.3%.
Do banks count all of my rental income?
No. APRA's guidance is that prudent lenders apply a haircut of at least 20 per cent to expected rental income, and more where vacancy risk is higher. The exact proportion is set by each lender's policy.
Does a higher rental yield mean I can borrow more?
It can help, but only by the portion of rent the lender counts. If you earn overseas, your salary is also shaded, so lender choice matters as much as the property.
Run the numbers before you commit
If you're weighing an investment purchase back home and want to see how a lender would count the rent and your overseas income, book a call with our team.
Sources
- Cotality: Home Value Index, October 2026 (results to 30 September 2026) (accessed 9 October 2026)
- Cotality: Australian housing values down for sixth straight month in September (accessed 9 October 2026)
- Cotality: Home Value Index, September 2026 (results to 31 August 2026) (accessed 9 October 2026)
- Cotality: Housing downturn spreads as 93% of capital city suburbs record winter value falls (accessed 9 October 2026)
- Australian Prudential Regulation Authority: APG 223 Residential Mortgage Lending (accessed 9 October 2026)
- Westpac: How to calculate rental yield (accessed 9 October 2026)
Aussie Expat Home Loans holds Australian Credit Licence 509125. This article is general information only and doesn't take your personal circumstances into account. Market figures are as published by Cotality and current to 9 October 2026. Lender policies on rental income and foreign income vary and change over time. Tax and currency matters are for your accountant or a registered tax agent. Before acting, consider your own situation and seek advice specific to it.
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