Yields on investment property have taken a back seat in recent years as investors searched for the next big capital growth area.
But the current climate demands a renewed focus on debt servicing and rental returns, as investors absorb higher interest rates.
Again, investors are receiving mixed signals. Yes, rents are rising, but so too are interest rates, and in many cases capital values.
And if the economy slows, what will happen to rents?
In its latest market overview, valuer HTW looked at rental returns in each city, and in quite a few regional areas, and found yields generally were just above or below 5 per cent gross.
When maintenance and debt servicing are taken into account, a few more percentage points come off that figure.
In some areas, rental increases and capital growth are occurring at the same time, so the yield itself is not moving.
The Gold Coast is a case in point.
HTW notes that the Gold Coast has had several years of low vacancies and solid rental growth. Rents are still on the increase. So are interest rates and market values.
The valuation firm says this leaves investors in a position of indecision about whether to buy, or wait for a softening of the property market or an easing of interest rates. Further south, Melbourne's CBD looks like being a win-win for investors.
Over the past few years, yields of 6 to 6.5 per cent were achieved - with 7 per cent not unheard of. But those returns were there because of the sluggish price growth up until last year.
That has now changed in a big way, but again there is still an insatiable rental demand and limited supply that will see rents rising.
In Perth, HTW wryly notes the word yield hasn't been openly discussed for a few years. It was unimportant because of the massive price growth.
That has now stopped, but ABS data for 2007 shows 500 people a day are moving from other states to Perth.
Yields in Perth are around 3.6 per cent for houses and 4 per cent for units.
Even though rents have risen 23 per cent in the past year and prices in some suburbs are now stagnating, HTW isn't expecting much growth in returns.
Properties in the $300-$320 a week range are rented quickly and yields can be higher in suburbs close to lifestyle options such as the city or beach (think Subiaco, Leederville, Northbridge, Scarborough, Cottesloe and Fremantle).
Across the country it's a difficult balance for investors to try to make sense of. Yes, they want the cash flow from a reasonable rental, but they also eventually want capital growth.
Many who already own investments are no doubt thinking how they can get more out of their property.
HTW provides the example of an agent who paid $370,000 for a one-bedroom unit in Brisbane city.
Brisbane is one city where yields are expected to rise, with price growth tipped to slow around mid-year, but rentals will continue to grow.
Unfurnished, this unit would have rented for $375 a week, but by putting $12,000 of furnishings into it, the owner got $450 a week not including the car space, which he rents separately for $150 a week. This turned a 5.3 per cent gross yield into an 8.2 per cent one.
That makes it almost positively geared, something you won't see much of in the current market.
