Where are Australia’s strongest rental markets?

Australia’s rental market remains tight, and for investors, the east coast capitals are offering distinct opportunities – if you know where to look, according to new research by Cotality.

In Sydney, the rental spectrum is wide. Prestige suburbs like Vaucluse and Barangaroo attract top-tier tenants but deliver modest yields below three per cent. For income-focused investors, the real action is in the middle and outer rings.

Suburbs such as Carramar, Cabramatta and Canley Vale are achieving five to six per cent yields with sub-2% vacancy rates. Middle-ring hubs like Parramatta and Ryde offer a balance of accessibility and rental strength, averaging 4% yields.

Melbourne’s rental market is showing signs of stabilisation, with vacancy at 1.4% and rents continuing to rise. Inner bayside suburbs like Brighton and Sandringham remain prestige plays, but the west and north are where yields shine, according to the new research.

Melton South, Werribee and Craigieburn offer rents between $380 to $470 and yields around five per cent. Regional centres such as Ballarat and Bendigo continue to attract investors with lower entry prices and consistent demand. Melbourne’s outer corridor is driving the state’s best rental income performance, according to the analysis, supported by population growth and infrastructure investment.

Brisbane has undergone a transformation. With median dwelling values up 8.8% in 2025, yields have compressed to around 3.6%, but demand remains strong. Inner-ring suburbs like Bulimba and Hawthorne offer prestige appeal, while middle-ring areas such as Graceville and Carindale balance rent and yield.

For stronger income returns, outer suburbs like Caboolture and Ipswich maintain yields near 4.5% with low vacancy. Regional Queensland adds further diversity, with Toowoomba and Mackay posting yields between five and six per cent, supported by logistics, education and lifestyle migration.

We’re helping investors navigate these shifting dynamics with location-specific strategies. Whether you’re targeting high-yield suburbs or long-term capital growth Sydney, Melbourne and Brisbane each offer compelling entry points.

The key is understanding the interplay between vacancy, affordability and economic depth – and acting before competition intensifies.