Rising Rental Yields: Why Affordable New Property Is Attracting Investor Attention

Why read this article

Discover why rising rents and improving rental yields are increasing investor attention on affordable new property across Australia.

• Understand why tight rental supply is supporting higher rents
• Learn how improving rental yields can strengthen an investment property’s cash flow
• Discover why lower-priced property is showing greater relative resilience
• Understand what changing negative gearing rules may mean for eligible new property

Australia’s property investment market is changing. While capital growth remains an important consideration, rental income and yield are becoming increasingly important parts of the investment equation.

National rents increased 5.9% over the year to June 2026, taking the median national dwelling rent to approximately $705 per week. Over the past five years, national rents have increased by 40.6%, or around $204 per week.

At the same time, rental availability remains tight. Australia’s national dwelling vacancy rate was approximately 1.6% in the June quarter, while rental listings were 16.7% below their five-year average. Every capital city recorded a vacancy rate below 2%.

For property investors, these conditions are putting greater emphasis on the income a property can produce while it is being held.

 

Rising Rents Are Improving the Investment Equation

When rental demand remains strong relative to available housing, rents can come under upward pressure. That has been evident across Australia, with annual national rental growth accelerating to 5.9% in the June quarter.

Future rental growth cannot be guaranteed. Tenant affordability, household incomes, population growth, new housing supply and economic conditions can all influence what renters are able and willing to pay. Cotality has also warned that affordability is increasingly becoming a constraint on further rental increases.

However, even moderate rental growth over several years can make a meaningful difference to an investment property’s cash flow. As rental income increases, it can cover a greater proportion of interest and other holding expenses, potentially reducing the amount an investor needs to contribute from their own income.

This is why rental yield is becoming an increasingly important part of property selection.

 

Rental Yields Are Moving Higher

National gross dwelling yields increased from approximately 3.5% at the end of 2025 to 3.7% in June 2026. The increase reflects continued rental growth alongside softer property values in parts of the market.

Gross rental yield measures the annual rental income generated by a property relative to its value. It does not account for costs such as interest, rates, insurance, property management and maintenance, but it provides investors with an important starting point when comparing property income.

Higher yields do not automatically make an investment positively geared. Cotality notes there are still relatively few Australian locations where a typically leveraged investor could achieve positive gearing at current borrowing costs.

Nevertheless, increasing rents can improve the cash-flow position of a property over time. In some circumstances, a negatively geared property may move closer to neutral cash flow or potentially become positively geared as rental income increases, depending on borrowing levels, expenses and the individual property.

That potential makes purchase price and rental income particularly important.

 

Why Affordable Property Matters

The lower-priced end of Australia’s housing market is also showing greater relative resilience.

Over the three months to July 2026, national property values in the upper quartile declined 3.2%, while values across the lower price tier increased 0.3%.

This does not mean every affordable property will increase in value or outperform higher-priced housing. It does, however, show that different parts of the property market are behaving differently.

Affordable property can attract demand from a broader range of renters and buyers. First-home buyers, investors and owner-occupiers can all compete within more accessible price brackets, particularly when borrowing capacity is constrained. Cotality has reported that housing demand has increasingly concentrated toward lower price points as affordability and serviceability pressures affect purchasers.

For investors, a lower purchase price combined with competitive rent can potentially create a stronger rental yield than purchasing a more expensive property where rents have not increased proportionately.

This supports continued consideration of new property below approximately $750,000 where suitable opportunities exist, although what represents an affordable price will vary significantly between locations.

 

New Property Has Another Important Advantage

From 1 July 2027, negative gearing of residential property will generally be limited to new builds. Properties held before 7:30 pm AEST on 12 May 2026 are exempt from the changes, while eligible new builds can continue to be negatively geared before and after 1 July 2027.

Investors purchasing established housing after 12 May 2026 will generally no longer be able to deduct residential property losses against non-residential income such as wages, although losses can be applied against residential property income and carried forward subject to the rules.

This creates an increasingly important distinction between new and established investment property.

Taxation should never be the sole reason for purchasing property. However, when the treatment of eligible new property is considered alongside rental income, depreciation, purchase price and future demand, it can strengthen the case for investors to investigate suitable new-housing opportunities.

 

Could Positive Gearing Become More Relevant?

The more important story may not be that positively geared property suddenly becomes commonplace, but that rising rents can progressively improve property cash flow.

A property that initially requires an investor contribution may require less over time if rental income increases. For properties with lower borrowing levels or stronger rental yields, this could potentially result in rental income covering most or all ongoing costs.

Actual outcomes will vary substantially and depend on interest rates, loan structure, property expenses, taxation and rental performance. Investors should therefore focus on the overall quality of the property rather than simply chasing the highest advertised yield.

The objective is to identify property where affordable purchase price, sustainable rental demand and longer-term market fundamentals work together.

 

The Rental Yield Opportunity

Australia’s rental market currently presents an important combination for property investors: rents have risen, vacancy rates remain low, gross yields have improved and lower-priced property has recently demonstrated greater resilience than the premium end of the market.

At the same time, upcoming negative gearing changes will increasingly direct taxation benefits towards eligible new residential housing.

None of these factors guarantees higher rents, positive cash flow or capital growth. But together they provide a reason for investors to look closely at well-selected, affordable new property where rental income represents a meaningful part of the investment return.

For investors, the question is therefore no longer simply how much a property could increase in value. It is also how much income the property can generate while it is owned, and how that income could improve the overall investment position over time.

How Accrue Real Estate Helps

Finding the right new property under $750,000 requires more than simply focusing on price. At Accrue Real Estate, we use market research and property data to identify locations where affordability is supported by factors such as housing demand, employment, infrastructure, rental conditions and future supply.

Our team helps clients compare new-property opportunities across Australia, assess builders and developers, and support property-related due diligence. We also consider rental demand and potential yield as part of the property research process, helping clients identify opportunities where rental income may support the investment case.

We work alongside your financial, taxation, lending and legal advisers so the property you consider can be assessed in the context of your broader circumstances and long-term objectives.

General information only. Accrue Real Estate provides property research and sourcing services only and does not provide financial product, taxation, legal or credit advice. Property prices, rents, yields, expenses and investment returns can rise or fall. Examples and scenarios are illustrative only and are not forecasts or guarantees. Taxation outcomes depend on individual circumstances and applicable legislation. Seek appropriate independent financial, taxation, legal and lending advice before making an investment decision.