MIX Property Group BLOG

Rental Yield vs Capital Growth – What Should You Prioritise?

When you're investing in property, one of the first big questions is: Should I prioritise rental yield or capital growth? Both can be powerful strategies—but depending on your financial goals, one may suit your situation better than the other.

In this article, we break down the difference between yield and growth, what each means in the current Tasmanian market, and how to choose a strategy that works for you.

🏠 What Is Rental Yield?

Rental yield refers to how much income your property generates, expressed as a percentage of its value.

Example:
If you purchase a property for $600,000 and rent it out for $600 per week, your gross rental yield would be:

$600 x 52 weeks ÷ $600,000 = 5.2%

There are two types of yield:

• Gross yield – income before expenses

• Net yield – income after expenses (rates, insurance, maintenance, etc.)

In Tasmania—especially Hobart and Launceston—rental demand is strong, with rental yields averaging around 4.4% and vacancy rates as low as 1%. This makes it an attractive option for cash flow-focused investors.

📈 What Is Capital Growth?

Capital growth is the increase in a property’s value over time.

Example:
A $600,000 property that grows 5% annually could be worth over $765,000 after five years—a gain of $165,000.

Capital growth is typically strongest in:

• Desirable, tightly held suburbs

• Areas undergoing infrastructure investment or urban renewal

• Regions with strong population and job growth

While Hobart has seen extraordinary capital growth in the past decade, some markets are now stabilising—making suburb selection more important than ever.

🤔 Rental Yield vs Capital Growth: What Should You Focus On?

Here's a quick guide:

⚖️ Can You Have Both?

Yes. The smartest property strategies often seek a balance between rental yield and capital growth. While it’s rare to find a property with high performance in both, some areas offer the right mix of:

• Affordable purchase price

• Solid tenant demand

• Infrastructure growth

• Long-term suburb appeal

In Tasmania, that might look like emerging northern suburbs of Hobart or regional hotspots, where rental demand is strong and values are steadily increasing.

🔑 Choosing What’s Right for You

Ask yourself:

• Do I need the property to pay for itself now?

• Can I afford to hold a growth-focused property short-term?

• Am I looking for long-term equity or short-term income?

• How does this property help me reach my next investment goal?

The answers will help determine your ideal approach.

🧭 Need Help Finding the Right Property Strategy?

At MIX Property Group, we work closely with buyers and investors across Hobart and greater Tasmania to identify smart opportunities—whether you’re chasing strong rental returns, long-term capital growth, or a combination of both.

👉 Let’s chat about your goals and tailor a plan to suit.

📞 Contact us
📍 Based in Hobart | Local experts across Southern Tasmania