If raw rental yield is what you are chasing, Melbourne’s numbers point two ways: inner-city units and the affordable outer north. Carlton units have run yields around 8.6%, with the CBD, Southbank and Travancore not far behind, while at the house level the strongest yields sit in outer suburbs like Campbellfield, Coolaroo and Dallas near 4.3%. But high yield and good investment are not the same thing, and that gap is the whole point of this article.
Highest-yielding Melbourne units
On the unit side, yields are strongest close to the city, driven by student and renter demand against relatively soft prices.
| Carlton | ~8.6% gross yield (units) |
| Melbourne (CBD) | ~7.2% gross yield (units) |
| Southbank | ~6.8% gross yield (units) |
| Notting Hill | ~6.5% gross yield (units) |
| Travancore | ~6.5% gross yield (units) |
Highest-yielding Melbourne houses
For houses, the strongest yields are in the affordable outer north and the Mornington Peninsula fringe.
| Koo Wee Rup | ~4.4% gross yield (houses) |
| Hastings | ~4.3% gross yield (houses) |
| Campbellfield | ~4.3% gross yield (houses) |
| Coolaroo | ~4.3% gross yield (houses) |
| Dallas | ~4.3% gross yield (houses) |
Why the highest yield is rarely the best buy
Here is the part the yield table hides. High-yielding CBD and student-belt units have, for years, been among the weakest performers for capital growth, and they can be hard to sell and hard to finance because of oversupply and lending caps on high-density blocks. The high-yield outer houses often sit on land with softer long-term demand. Yield pays you while you hold. Capital growth is where the real wealth in Melbourne property has been made. Chase yield alone and you can win the monthly cash flow while losing the decade.
How a buyer’s agent weighs it up
We look at total return, not one number. That means yield for serviceability, but weighted against capital growth prospects, land content, scarcity, liquidity and how easily the property can be financed and later sold. For most investors the sweet spot is a well-located property with a fair yield and genuine growth upside, not the top of the yield table. If cash flow is the priority, we would rather find a solid yield in a suburb with a future than the highest yield in one without.
If you want the growth side of the picture, see our best suburbs to invest in Melbourne in 2026, or read how we approach investment purchases.
Rental yield FAQs
Which Melbourne suburbs have the highest rental yield?
On the unit side, inner suburbs like Carlton, the CBD, Southbank, Notting Hill and Travancore have shown the strongest gross yields, some above 8%. For houses, affordable outer-north suburbs such as Campbellfield, Coolaroo and Dallas, and the Peninsula fringe around Hastings and Koo Wee Rup, sit around 4.3% to 4.4%.
Is a high rental yield always a good investment?
No. Many of Melbourne’s highest-yielding properties, especially high-density city units, have delivered weak capital growth and can be harder to sell and finance. Yield supports cash flow, but long-term wealth in Melbourne has come mainly from capital growth, so total return matters more than yield alone.
Should I buy for yield or capital growth in Melbourne?
It depends on your goal, but most investors do best targeting total return: a well-located property with a fair yield and real growth prospects, rather than the highest yield available. Yield helps you hold the asset; growth is what builds the equity.
Yield figures are indicative gross yields drawn from 2025 Cotality data via loans.com.au and move over time. Verify current figures at the time of publishing. General information, not financial advice.
