The RBA cash rate has sat at 4.35% since November 2023. For property investors, this is not an abstract macroeconomic fact — it is the number that determines whether your investment property generates income or costs you money every week.

At 4.35%, the arithmetic of property investment has changed materially. Markets that worked at 2% rates often don't work at 4.35%. But some do — and identifying them requires looking at the right data.

The Math at 4.35%

A standard investor loan at 4.35% (cash rate) currently prices at roughly 6.0–6.5% for a variable investor mortgage (adding the standard bank margin). On a $600,000 loan with principal and interest repayments over 30 years, that is approximately $3,600–$3,800 per month in mortgage repayments alone.

Before the investment makes sense on a cashflow basis, rent needs to cover that — plus rates, insurance, property management, and maintenance, which typically add another $400–$600 per month.

That means total monthly outgoings of approximately $4,000–$4,400 on a $600,000 purchase. To break even, you need approximately $1,000–$1,100 per week in rent.

At a $600,000 purchase price, that requires a rental yield of roughly 8.7–9.5% to be fully cashflow neutral.

No suburb in Australia reliably delivers those yields. Which means almost every investment property is cashflow negative to some degree at current rates — the question is how negative, and whether the tax treatment and capital growth potential justify the shortfall.

The Yield Threshold That Actually Matters

Rather than seeking impossible 9%+ yields, the practical question is: which suburbs are generating yields high enough that the cashflow gap is manageable?

At current rates, a meaningful threshold is 5.5% gross yield. At 5.5% on a $600,000 property:

After negative gearing (for new builds, or grandfathered established properties) at a 37% marginal rate:

That is not a comfortable position, but it is fundable. An investor with $120,000 income can absorb it and still build wealth through capital appreciation.

At 4% gross yield (common in Sydney and Melbourne), the same analysis produces a net weekly shortfall of $350–$400/week — which is where many investors are currently stretched.

Which Markets Are Delivering 5.5%+ Yields

PropTime's current data identifies the following market types as consistently delivering yields at or above the 5.5% threshold:

Regional Queensland

The strongest yield performers in the PropTime database are concentrated in regional Queensland. Markets like Toowoomba, Cairns suburbs, Rockhampton, Mackay, and the Townsville corridor are generating yields in the 6.0–7.5% range on median properties.

The combination of high yield and vacancy rates below 1.5% means these markets are generating real cashflow advantages — not theoretical yield inflated by struggling rental demand.

What to watch: Some regional markets have seen 20%+ price growth in 2023-2026. At elevated entry prices, the yield compresses. Always calculate yield on current purchase price, not historical data.

Outer Perth

South East Perth corridors — Armadale, Kwinana, Rockingham — continue to show yields in the 5.5–7% range on entry-level properties. Perth's overall vacancy rate of 0.5–0.8% means demand is structural, not cyclical.

Western Australia's economy is resource-driven and has historically been more volatile than eastern states. The current conditions are strong, but building approvals are rising in response — monitor supply indicators closely.

Adelaide Growth Corridors

Northern Adelaide (Elizabeth, Davoren Park, Salisbury corridors) and some southern suburbs are delivering 5.5–6.5% yields with vacancy rates well below national averages. Adelaide has had lower profile than Perth or Queensland but has delivered consistent performance.

Parts of Regional NSW and Victoria

Hunter Valley (ex-Newcastle), Latrobe Valley, Ballarat outer suburbs, and Wagga Wagga all show pockets of 5.5%+ yield. These markets require careful suburb-level analysis — there is more variation within regions than in Queensland or WA.

The Capital City Picture

Sydney

Sydney's median yield sits around 2.8–3.2%. At current interest rates, this means almost no investment property in Sydney is close to cashflow neutral on a standard mortgage. The investment case rests entirely on capital growth expectations.

The city's price-to-income ratio above 14× means the structural growth story is constrained. Sydney made sense when rates were 2% and you could use a yield of 3% to offset a 2% borrowing cost. At 6.2% borrowing cost, a 3% yield creates a $3,200+ monthly shortfall on a $1 million purchase.

PropTime's scores for Sydney are predominantly in the 45–60 range — not because the city is broken, but because the yield/cost equation doesn't stack up for the next 3–5 years relative to alternatives.

Melbourne

Melbourne's story is similar to Sydney, with the added complication of land tax reform and a post-COVID investor exodus that has driven sustained vendor discounting. Yields of 2.8–3.5% across most of inner Melbourne, combined with softening rental demand in the apartment segment, make the cashflow story difficult.

Melbourne outer growth corridors (Melton, Wyndham Vale, Tarneit) show somewhat better yields at 4.0–4.8%, but vacancy rates have been rising as new supply enters the market.

Brisbane

Brisbane is the most interesting of the three major east coast cities. Inner-city yields of 3.5–4.5% are below the 5.5% threshold, but the demand story is stronger — net population growth, a growing economy, and the 2032 Olympics infrastructure pipeline are real demand drivers.

Brisbane outer corridors (Ipswich, Logan, Moreton Bay) show 5.0–6.0% yields with lower entry prices. These are the areas where the yield/growth combination is most compelling in south-east Queensland.

Perth

Perth has the strongest yield/vacancy combination of any major Australian city in 2026. Median yields of 4.5–5.5% across metro Perth, combined with 0.5–0.8% vacancy, create the most investor-friendly conditions in the country.

The risk is timing — Perth has historically been prone to sharp cycles. The mining investment cycle has peaked before and taken property markets down with it. Investors entering at 2024–2026 prices need to be comfortable with a 7–10 year hold horizon.

How PropTime Scores These Markets

The PropTime model captures the yield/rate dynamic through four key indicators:

  1. Rental yield — the absolute yield, measured against the 5.5% threshold and above
  2. Vacancy rate — confirming that the yield is supported by genuine demand, not artificially maintained rents in a weak market
  3. Rental growth — whether the yield is improving or deteriorating
  4. Affordability — checking that entry price hasn't already priced out the yield advantage

A suburb that scores 80+ is typically delivering on at least three of these four measures. The highest-scoring suburbs in the current model show yields above 5.5%, vacancy below 1.5%, positive rental growth, and purchase prices that keep the debt-service ratio manageable.

What This Means for Your Strategy

The 4.35% rate environment is likely to persist for at least 12–18 months. The RBA's signalling suggests cuts are possible but not imminent.

The practical implication:

Don't model on rates falling. Buy investments that work at current rates. If rates drop, that is upside — not the base case.

Prioritise yield floor over growth ceiling. Markets with genuine 5.5%+ yields provide a buffer. If rates stay elevated, the cashflow is manageable. If rates fall, the cashflow improves materially while capital growth adds further return.

Look beyond the CBDs. The data in PropTime consistently shows that outer-metro and regional markets deliver both the yield and the demand fundamentals that inner-city apartments do not at current rates.

The Suburb Intelligence tool lets you filter all 690 suburbs by minimum yield, maximum vacancy rate, and state — which is exactly the right way to identify markets that work at 4.35%.

This article provides general information only and does not constitute financial advice. Always model your specific situation and consult a qualified adviser before making investment decisions.