Glossary · Australian property
Rental yield.
The annual rent a property earns expressed as a percentage of its purchase price. Gross yield ignores costs. Net yield subtracts holding costs.
Rental yield is the annual rent a property earns expressed as a percentage of its purchase price. Gross yield = annual rent ÷ purchase price. Net yield = (annual rent − annual holding costs) ÷ purchase price. Holding costs include council rates, water, insurance, strata, property management, and a maintenance reserve.
Net yield is the figure that determines whether a property is positively, neutrally, or negatively cashflowed. Gross yield is what most listings advertise. Net yield is what a serious analyst tracks.
Rate-stressed yield (gross or net at +100bps on the loan) is a sanity check used in APRA-style serviceability assessment. It models what the cashflow does if rates lift one percentage point.
Worked example
On a $750,000 purchase earning $620/week ($32,240/year), gross yield is 4.30%. With $7,500 in annual holding costs, net yield is 3.30%.
Source
Industry-standard formula. Vacancy and cost assumptions cross-checked against NSW Fair Trading bond-lodgement data and council-rate notices.
Related terms
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