Rental Yield in Melbourne’s North, Suburb by Suburb

Rental yield is annual rent as a percentage of a property’s value. Gross yield is weekly rent times 52, divided by the price, times 100. A $687,000 house in Epping renting at $530 a week yields 4.01% gross. Net yield subtracts costs, and in Melbourne’s north that takes roughly a full percentage point off the gross figure before any mortgage interest.

The formula, then a worked example

Gross rental yield = (weekly rent × 52) ÷ property value × 100

Epping, three-bedroom house:

• Weekly rent: $530
• Annual rent: $530 × 52 = $27,560
• Property value: $687,000
• $27,560 ÷ $687,000 = 0.0401
• Gross yield: 4.01%

Net rental yield = (annual rent minus annual costs) ÷ property value × 100

Same property, with the costs filled in:

• Annual rent: $27,560
• Management fees, letting and administration: about $2,000
• Council rates and water charges: about $2,600
• Landlord insurance: $2,248, which is Canstar’s average Victorian house premium as at March 2026
• Repairs and maintenance allowance: about $1,500
• Three weeks’ vacancy between tenancies: $1,590
• Total costs: about $9,938
• Net income: $17,622
• $17,622 ÷ $687,000 = 0.0257
• Net yield: 2.57%

That gap, 4.01% down to 2.57%, is the whole reason gross yield is a poor basis for a decision. And it is before a dollar of mortgage interest.

Change any of my assumptions and the number moves. The point is the structure, not my repairs allowance.

The suburb table

Here is what I measured, and how.

The sale medians are Domain’s, by bedroom count, for sales in the twelve months to October 2026. The rents are the median advertised weekly rent from Domain’s rental listings on 13 October 2026: suburb and bedroom filters applied, listings with a deposit taken excluded, first results page, then filtered down to listings whose address is actually inside the target suburb. The listing count is shown so you can judge each sample.

Suburb and segment	Median price	Advertised rent	Listings	Gross yield
Epping, 2 bed unit or townhouse	$490,000	$455	4	4.83%
Craigieburn, 3 bed house	$654,000	$530	20	4.21%
Epping, 3 bed house	$687,000	$530	20	4.01%
Epping, 4 bed house	$800,000	$600	15	3.90%
Doreen, 3 bed house	$730,000	$545	14	3.88%
Fawkner, 3 bed, all dwelling types	$837,000	$600	6	3.73%
Thomastown, 3 bed house	$765,000	$540	16	3.67%
Lalor, 3 bed house	$758,000	$530	13	3.64%
Doreen, 4 bed house	$862,000	$590	12	3.56%

Two honest caveats before anyone quotes this.

Advertised rent is an asking price, not an achieved one. In a soft rental market the achieved figure sits below it, which means these yields are, if anything, slightly generous. The Victorian Government’s own Rental Report publishes achieved median rents by suburb, but as at 13 October 2026 the most recent release covered the September quarter of 2025. A twelve-month-old achieved figure against a current asking figure is a worse comparison than a current asking figure honestly labelled, which is why I measured listings.

And the Fawkner and Epping two-bedroom samples are small. Six and four listings respectively. Treat those two rows as indicative.

What the table actually says

Three patterns, and the first is the one investors most often get backwards.

Smaller dwellings yield more

Look at Epping alone, which is the cleanest comparison because every other variable is held constant.

Epping segment	Price	Rent	Gross yield
2 bed unit or townhouse	$490,000	$455	4.83%
3 bed house	$687,000	$530	4.01%
4 bed house	$800,000	$600	3.90%

Yield falls as the dwelling gets bigger, monotonically, across three segments in one suburb.

The reason is simple once you see it. Going from two bedrooms to four adds $310,000 to the price, a 63% increase. It adds $145 a week to the rent, a 32% increase. Tenants do not pay proportionally for space. Buyers do.

So an investor chasing yield in Epping should be looking at two-bedroom units, not four-bedroom houses. An investor chasing capital growth might reasonably take the opposite view, since Epping’s four-bedroom segment has the deeper owner-occupier buyer pool. Both are defensible. What is not defensible is buying a four-bedroom house for yield reasons.

Distance from the city raises yield

Fawkner sits about 12 kilometres north of the CBD. Craigieburn and Epping are roughly twice that out.

Fawkner’s three-bedroom median is $837,000. Craigieburn’s is $654,000. That is a $183,000 premium for being closer in. Rents do not rise by the same proportion: Fawkner’s advertised three-bedroom rent of $600 is 13% above Craigieburn’s $530, while the price is 28% above.

Result: Fawkner yields 3.73% and Craigieburn 4.21%. The closer-in suburb yields less.

This is the oldest trade-off in residential investment and it is worth stating plainly, because it explains why a yield table is not a ranking of good suburbs. Craigieburn tops this table. That does not make it the better investment than Fawkner. It makes it the higher-income, lower-land-value one.

Thomastown and Lalor are the anomaly

Thomastown at 3.67% and Lalor at 3.64% sit at the bottom of the house rows, below Doreen and well below Craigieburn.

Both have three-bedroom medians in the high $750,000s to mid $760,000s, which is Fawkner territory, while sitting much further out than Fawkner. Their rents are ordinary: $540 and $530.

What you are seeing is land value. Thomastown and Lalor have large old blocks, and a meaningful share of their sale prices reflects subdivision and redevelopment potential rather than the rent the existing house can command. A buyer paying $765,000 for a Thomastown three-bedroom is frequently not buying it to rent out as it stands.

For a yield investor, that makes both suburbs poor value. For a developer, it is the reason they are the most active subdivision suburbs in the corridor. The low yield is a symptom of something that is valuable for a different purpose.

What counts as a good yield in Melbourne

Published guides tend to quote 4% to 5% for Melbourne houses and a little more for units. Against that benchmark, most of this corridor sits at the bottom of the range or just below it.

I would not frame it as pass or fail. The useful questions are these two.

Does the yield cover the holding costs? At a net yield near 2.6% on an Epping three-bedroom house, and a mortgage rate materially above that, the property is negatively geared. That is a strategy, not an accident, but it needs to be a choice you made rather than one you discovered.

Is the yield compensating you for weak growth, or is low yield a sign of expected growth? Both happen. High-yield, low-growth and low-yield, high-growth are the two classic profiles, and yield alone cannot tell you which one you are looking at. Which is the honest answer to “does high yield mean low growth”: usually, in aggregate, over long periods, with many exceptions.

Which value do you divide by?

A question that sounds pedantic and changes the answer by more than any suburb choice.

Say you bought an Epping three-bedroom house in 2016 for $450,000. It is now worth $687,000 and rents for $530 a week.

Divide by what you paid and the yield is 6.12%. Divide by what it is worth and the yield is 4.01%. Same property, same rent, same week, two numbers two percentage points apart.

Both calculations are used, and the one on your purchase price is the one that misleads. Here is why.

Yield answers the question “what return is this asset producing on the capital tied up in it”. The capital tied up in it is $687,000, because that is what you would have if you sold. The $450,000 is a historical fact about 2016 and it has no bearing on what you should do now. An owner telling themselves they are earning 6.12% is measuring a decision they made a decade ago, not the one in front of them.

Use the current value. Always. If you have owned the property a long time, this single correction is usually the most useful thing in a yield calculation, because it reframes a property that feels like a good earner as one producing 4% on a sum of money you could deploy elsewhere.

The purchase-price figure has exactly one legitimate use: measuring, after the fact, how the original purchase performed. It is a scorecard, not a decision tool.

The costs most yield calculations leave out

My net yield example above covers the obvious items. Four more get missed, and they are not small.

Land tax. An investment property is not your principal place of residence, so land tax applies on site value as at 31 December. In the $300,000 to $600,000 band Victoria charges $1,350 plus 0.3% of the amount above $300,000. On a site value of $400,000 that is $1,650 a year, which is 0.24 percentage points of gross yield on a $687,000 property. If you own more than one property, land tax is assessed on your total holdings, so the second property is taxed at a higher marginal rate than the first. Many investors model the second purchase using the first one’s land tax figure and get an unpleasant surprise.

Owners corporation fees. If the two-bedroom unit at the top of that table is where the yield is, the fees are where some of it goes back. The building insurance that makes a unit’s landlord policy cost $363 instead of $2,248 is paid through those fees. Count them.

The cost of compliance. Smoke alarm checks annually, gas and electrical safety checks every two years from 13 October 2026, and the energy efficiency standards phasing in from 1 March 2027. These are recurring line items now, not one-offs.

Letting fees on turnover. A tenancy that turns over every twelve months incurs a letting fee every twelve months. One that runs four years does not. Tenant retention is worth real money and it almost never appears in a yield model.

Add land tax and owners corporation fees to my Epping example and the net yield falls from 2.57% to somewhere near 2.3%. That is the figure to compare against a term deposit, not the 4.01%.

What depreciation does to the after-tax picture

One adjustment runs the other way, and it is the reason net yield understates an investor’s actual position.

Capital works on residential property built from 16 September 1987 are deductible at 2.5% a year over 40 years. On a house with $250,000 of original construction cost, that is $6,250 a year of deduction requiring no cash outlay at all. At a 30% marginal rate it is worth about $1,875 in reduced tax.

Against a $687,000 property, $1,875 is 0.27 percentage points. So a property with a solid depreciation position can be worth a quarter of a point more than its net yield suggests, and a 1970s house with the deduction period long exhausted is worth correspondingly less.

That is why two properties with identical gross yields can perform differently after tax, and why a depreciation schedule is worth getting before you decide a property underperforms.

What moves your yield that you control

Most of a yield figure is set by the market. Two parts are not.

Vacancy. Three weeks empty costs $1,590 at $530 a week, which is 0.23 percentage points of gross yield on a $687,000 property. Reducing that to one week recovers most of it. Vacancy is the largest controllable item in the whole calculation and it is decided by pricing the property correctly and presenting it well, not by the fee your agency charges.

Setting the rent on evidence. Under Victorian law you must give at least 90 days’ notice of a rent increase, you can generally only increase once every 12 months, and you must tell the renter how you calculated it using a stated method. “Based on market valuation” is not an acceptable method. An owner who reviews rent annually against documented comparable leases keeps pace with the market. An owner who leaves it for three years because the tenant is good has quietly given away yield, and then has to make it up in one jump that a renter may challenge.

A third item is arriving. From 1 March 2027 Victoria begins phasing in minimum energy efficiency standards covering heating, cooling, hot water, showerheads, ceiling insulation and draughtproofing. Any yield you calculate on an older unimproved house in Lalor or Thomastown should carry that capital cost against it.

Run it on your own property

The formula is at the top and it takes a minute. What takes longer, and matters more, is getting the two inputs right: a rent figure based on comparable leases rather than a guess, and a sale value based on comparable sales rather than what you hope.

We will give you both with the evidence attached. If the net yield comes back at 2.5%, that is still useful, because it tells you what you are actually holding.

Frequently asked questions

1. What is rental yield? Rental yield is the annual rent a property produces, expressed as a percentage of its value. It measures income return, separately from capital growth. Gross yield uses rent alone. Net yield subtracts holding costs such as management fees, rates, insurance, repairs and vacancy, which in Melbourne’s north takes roughly a percentage point off the gross figure before any mortgage interest.

2. What does rental yield mean? It means what the property earns as income relative to what it is worth. A 4% yield means annual rent equals 4% of the property’s value. It is useful for comparing income returns between properties and suburbs, and useless on its own for judging whether a property is a good investment, because it says nothing about capital growth or the quality of the asset.

3. How do you calculate rental yield? Multiply the weekly rent by 52 to get annual rent, divide by the property’s value, and multiply by 100. For net yield, subtract annual costs from the annual rent before dividing. Worked example: $530 a week is $27,560 a year; divided by $687,000 that is 4.01% gross. After about $9,938 of costs, the net is 2.57%.

4. How do you calculate gross rental yield? Gross rental yield = (weekly rent × 52) ÷ property value × 100. Use the current market rent rather than the rent an existing tenant pays, and use a current valuation or a comparable-sales estimate rather than what you paid. Both inputs being out of date is the most common reason a yield figure misleads.

5. What is a good rental yield in Melbourne? Published guides generally put 4% to 5% gross on Melbourne houses, with units a little higher. Measured against that, Melbourne’s northern corridor sits at the bottom of the range: 4.21% in Craigieburn down to 3.64% in Lalor on three-bedroom houses, as at 13 October 2026. A more useful test than any benchmark is whether the yield covers your holding costs.

6. What is the difference between gross and net yield? Gross yield counts rent only. Net yield subtracts the costs of owning the property: management fees, council rates, water charges, landlord insurance, repairs and the weeks it sits vacant. On an Epping three-bedroom house the difference is 4.01% gross against about 2.57% net. Anyone quoting a yield without saying which one they mean is quoting gross.

7. What is the rental yield in Epping? As at 13 October 2026, using Domain’s medians for the twelve months to October 2026 and the median advertised rent I measured from Domain listings: a three-bedroom house yields 4.01% gross ($530 a week against $687,000), a four-bedroom house 3.90% ($600 against $800,000), and a two-bedroom unit or townhouse 4.83% ($455 against $490,000). Net yields run roughly a percentage point lower.

8. Which northern suburb has the best yield? Of the suburbs measured, Craigieburn leads on three-bedroom houses at 4.21%, ahead of Epping at 4.01% and Doreen at 3.88%, with Thomastown at 3.67% and Lalor at 3.64% at the bottom. Across all segments, Epping two-bedroom units and townhouses lead at 4.83%, though that sample was only four listings. Highest yield is not the same as best investment.

9. Does high yield mean low growth? In aggregate and over long periods, usually, with plenty of exceptions. Suburbs where prices have run ahead of rents show low yields, and suburbs where rents have held up while prices have not show high ones. Thomastown and Lalor are instructive: their low yields reflect land value and subdivision potential priced into the sale figure rather than weak rental demand.

10. How does yield change with interest rates? Yield itself does not move with rates, because the formula contains no interest. What changes is whether the yield is enough. At a net yield near 2.6%, a mortgage rate above that means the property costs you money to hold each month. Rates also move prices over time, which changes the denominator, so a yield calculated two years ago on an old valuation can be well out.