The Caulfield South rental yield sits at approximately 3.2% to 3.6% gross for houses and 4.0% to 4.8% gross for units in 2026, making it one of Melbourne’s inner-south suburbs where unit investors consistently outperform house investors on income return. Understanding exactly how those figures are calculated, and what drives them up or down, is essential before committing capital to this tightly held market.

What Is the Median Rent and Median Price in Caulfield South Right Now?

Accurate yield calculations start with accurate inputs. Based on CoreLogic data and Domain rental market reports for the first half of 2026, Caulfield South’s current benchmarks are:

• Median house price: approximately $1,820,000
• Median weekly house rent: approximately $1,120 per week
• Median unit price: approximately $680,000
• Median weekly unit rent: approximately $620 per week

CoreLogic data indicates that Caulfield South’s median house price has grown roughly 4.1% year-on-year through to mid-2026, while unit prices have risen a more modest 2.8% over the same period. Rents, however, have climbed more steeply: SQM Research’s latest figures show asking rents in the suburb’s postcode (3162) increased by approximately 6.3% in the 12 months to June 2026, compressing vacancy rates to just 1.2%. That tight vacancy rate is a strong signal of sustained rental demand.

How Do You Calculate Gross and Net Rental Yield in Caulfield South?

Gross rental yield is the simplest starting point and is calculated by dividing annual rental income by the property’s purchase price, then multiplying by 100.

Gross Yield Formula

1. Take the weekly rent and multiply by 52 to get annual income.
2. Divide annual income by the purchase price.
3. Multiply by 100 to express as a percentage.

Caulfield South House Example

Weekly rent of $1,120 x 52 = $58,240 annual rent. Divided by $1,820,000 = 3.20% gross yield.

Caulfield South Unit Example

Weekly rent of $620 x 52 = $32,240 annual rent. Divided by $680,000 = 4.74% gross yield.

Net yield strips out the costs of ownership. A reasonable estimate for ongoing holding costs in Melbourne’s inner south, including property management fees, council rates, water, landlord insurance, maintenance, and body corporate (for units), typically reduces gross yield by 1.0% to 1.5%. On that basis, Caulfield South investors can realistically expect:

• Houses: net yield of approximately 1.7% to 2.2%
• Units: net yield of approximately 3.2% to 3.7%

These numbers align with what the Australian Taxation Office (ATO) observes in its annual taxation statistics: the majority of residential landlords in high-value inner-Melbourne suburbs report net rental losses, meaning negative gearing is the norm for house investors in areas like Caulfield South. ATO data for the 2022-23 income year (the most recently published) showed that more than 60% of individual landlords across Australia recorded a net rental loss, with losses concentrated in premium suburban markets where capital growth is the primary investor thesis.

If you are comparing yields across Melbourne’s inner suburbs, the rental yield Melbourne guide from Collings Real Estate provides a suburb-by-suburb breakdown that puts Caulfield South’s figures into broader context.

Why Do Unit Yields Outperform House Yields in Caulfield South?

The yield gap between units and houses in Caulfield South is not accidental. Several structural factors explain the 1.5 percentage point difference in gross yield:

• Entry price effect: Units enter the market at around $680,000 compared to $1,820,000 for houses, meaning the same rental dollar goes further as a proportion of the asset value.
• Renter demographics: Caulfield South is within easy reach of Monash University’s Caulfield campus, generating consistent demand from students, academic staff, and young professionals who prefer compact, lower-maintenance dwellings.
• Supply constraints: Heritage overlays and low-density zoning limit new unit supply, which keeps vacancy low and supports rent growth.
• Lifestyle appeal: Proximity to Caulfield Racecourse, Koornang Road village shopping, and Princes Park makes the suburb attractive to renters who could otherwise choose to buy.

For investors who want to maximise income return rather than prioritise capital growth alone, exploring Investment Properties Melbourne listings that focus on high-yield units and townhouses is a logical next step. Properties priced between $600,000 and $800,000 in this suburb tend to deliver the strongest yield-to-price ratio.

How Does Caulfield South Compare to Nearby Investor Suburbs?

Benchmarking Caulfield South against comparable inner-south suburbs reveals where it sits in the yield spectrum:

• Caulfield North: Unit gross yield approximately 4.5%, house gross yield approximately 3.0% (CoreLogic, June 2026)
• Caulfield East: Unit gross yield approximately 4.6%, house gross yield approximately 3.1%
• Carnegie: Unit gross yield approximately 4.9%, house gross yield approximately 3.4%
• Caulfield South: Unit gross yield approximately 4.7%, house gross yield approximately 3.2%

Caulfield South sits in the middle of this peer group. Carnegie edges ahead on both metrics, largely because its median house and unit prices are lower while rents are comparable. However, Caulfield South compensates with stronger historical capital growth: according to CoreLogic’s 10-year rolling data, Caulfield South houses have delivered compound annual growth of approximately 5.8%, compared to Carnegie’s 5.1%. Investors who are comfortable accepting a slightly lower income return in exchange for stronger long-term appreciation have historically been well-served here.

For investors also considering the broader Caulfield precinct, the Caulfield investment returns guide from Collings Real Estate covers strategies for achieving 6% and above through commercial-residential mixed holdings and multi-tenancy configurations.

What Are the Key Risks for Rental Investors in Caulfield South in 2026?

No yield analysis is complete without an honest assessment of downside risk. Caulfield South investors should weigh the following in 2026:

Interest Rate Sensitivity

The Reserve Bank of Australia (RBA) has reduced the cash rate to 3.85% as of mid-2026 following a cycle of cuts that began in early 2025. While this has improved borrowing conditions, investors with variable-rate loans should stress-test their cash flow against a potential return to 4.5% or higher. At a 3.2% gross yield, a house in Caulfield South with 70% leverage will remain negatively geared unless rents continue their recent upward trajectory.

Vacancy Risk

Current vacancy at 1.2% (SQM Research, June 2026) is extremely low, but this can shift quickly. If Monash University enrolment patterns change or if new apartment supply is approved in adjacent suburbs, vacancy could rise toward the 2.5% to 3% range, reducing effective annual income by $1,600 to $3,200 per year for a typical unit.

Maintenance and Body Corporate Costs

Older unit stock in Caulfield South, particularly the substantial number of 1960s and 1970s brick flats, can carry elevated maintenance costs and rising body corporate levies. ATO tax statistics confirm that depreciation and repairs are among the top three deductions claimed by Victorian residential landlords, underlining how real these costs are in practice. Buyers of older stock should commission a thorough building inspection and request at least three years of body corporate financials before exchanging contracts.

Land Tax

Victoria’s land tax thresholds and rates have been revised in recent years. Investors holding property in their own name with a Caulfield South house valued at $1,820,000 should budget for significant annual land tax obligations, which further erodes net yield. Structuring advice from a qualified accountant is strongly recommended before purchase.

What Rental Yield Should Investors Target in Caulfield South?

There is no universal answer, but a practical framework helps. Investors whose primary objective is income should look for gross unit yields above 4.5% and be prepared to negotiate hard on properties that have been sitting on the market for more than 30 days. Investors whose primary objective is capital growth can tolerate lower yields, knowing that Caulfield South’s long-run appreciation of 5.8% per annum compounds meaningfully over a 10-year hold.

Dual-objective investors, those seeking both reasonable income and growth, often find the sweet spot in well-located two-bedroom units priced between $650,000 and $750,000 on quiet residential streets within 500 metres of Glen Huntly Road or Hawthorn Road. These properties tend to attract stable, long-term tenants, which keeps vacancy low and reduces re-leasing costs.

Investors who want to diversify income across multiple tenancies might also explore Blocks of Units listings in Melbourne’s inner suburbs, where owning multiple dwellings on a single title can dramatically improve net yield relative to standalone residential purchases.

Conclusion

Caulfield South offers a gross rental yield of approximately 3.2% for houses and 4.7% for units in 2026, underpinned by a vacancy rate of just 1.2% and annual rent growth of around 6.3%. For house investors, the yield story is secondary to capital growth. For unit investors, the income case is genuinely competitive within Melbourne’s inner-south market. The numbers reward careful property selection, diligent cost management, and a clear-eyed view of net returns after tax, rates, and management expenses. Collings Real Estate’s team specialises in this precinct and can help you identify properties that align with your specific yield and growth objectives.