rents fall well behind home price surge, page-18

That is net yield for a cash purchase.

Example: Morningside Brisbane.

3bdr 2 bathroom townhouse 550k

Weekly rent $600
Annual gross rent less 7.5% estate agency
= $29,023

Less rates & insurance at $3,500
= $25,523

Add back tax benefit of depreciation (2.5% of building cost @ $200k) = $5000 depreciation x 42.5% = $2,125 benefit

= $25,523 + $2,125
= $27,648 annual return

$27,648 / $550,000

= net rent yield of 5.02%

Then add any capital gains on top.