Adelaide Apartments Outpace Houses on Short-Term Yield

The gap between Adelaide apartment and house yields comes from the entry price spread, not the nightly rate spread. A 2-bed apartment at $505,452 sits well below a 3-bed house at $867,130, yet apartment nightly rates of $227 do not fall proportionally below the house rate of $357. The result: apartments gross around 9.6% on short-term rental against 7.5% for houses, a gap of 2.1% on the gross figures before body corporate levies. These are city medians across 16 Adelaide suburbs, and individual areas sit well above or below.

Bedroom-by-Bedroom Comparison: Adelaide Houses vs Apartments

City medians across 16 suburbs. Gross yields before body corporate (apartments) and before operating costs.

Why the Apartment Yield Premium Exists, and What Narrows It

The price mechanism is the simple driver. A 2-bed Adelaide apartment at $505,452 earns roughly $227 a night when occupied; the 3-bed house at $867,130 earns $357. That is around three-fifths of the house's nightly rate for around three-fifths of the purchase price. Yields follow the price spread, not the rate spread, which is why apartments lead the table on a gross basis.

Body corporate levies erode that headline advantage. A typical 2-bed Adelaide apartment carries body corporate fees estimated at around $3,748 per year, which is not deducted from the gross yields in the table. Boutique inner-city buildings with lifts, pools, or concierge services charge significantly more, while older walk-up blocks in suburbs like Norwood or Kensington run lower. Once levies, sinking fund contributions, and any special projects are factored in, the apartment's net yield advantage shrinks meaningfully and at the upper end of the strata range can disappear altogether.

There is also a regulatory risk inside the building. Strata by-laws can restrict or outright ban short-term letting, and South Australian title legislation gives owners' corporations real power to impose these rules by majority vote. A building in central Adelaide with a strong owner-occupier base may pass a by-law against nightly letting at any time, which would force a switch to long-term rental. Always read the by-laws and recent meeting minutes before exchanging on an apartment intended for holiday rental use.

How the Curve Bends Across Bedroom Counts

The two property types follow different curves and the table makes the shape visible. House yields tend to climb with bedroom count because larger properties command disproportionately higher nightly rates from family groups and corporate accommodation; the 1-bed house is rare in Adelaide, often a granny flat or split studio attracting solo or couple bookings at modest rates. By the 4+ bed end, larger family homes in established suburbs and Adelaide Hills villages can charge group rates that lift the yield curve despite the higher entry price.

Apartment yields actually climb with bedroom count in Adelaide, with 4+ bed apartments delivering the highest short-term rental yield in the table at 13.2%. Larger apartments are uncommon in Adelaide, and the thin slice of 3-bed and 4+ bed listings tends to be in newer inner-city buildings where the rent-to-price ratio works in the investor's favour. The long-term rental columns tell the same story: apartments outyield houses at every bedroom count (8.1% for 4+ bed apartments versus 3.7% for 4+ bed houses), reflecting the persistent entry-price gap between the two property types in this market.

Lobethal - Woodside Leads on Long-Term Yield, Inner Adelaide Trails

City medians hide significant suburb-level divergence. Lobethal - Woodside leads the Adelaide region on long-term rental yield at 4.4%, well above the city median, while suburbs near the central business district sit closer to the 2.5% range as land prices anchor at the top of the South Australian market. Mallala at 4.3% and Lewiston - Two Wells at 4.2% sit in the 4% band, reflecting outer-metro pricing where rents stay more proportional to capital values. The dashboard shows suburb-level data for every bedroom count and property type, so you can compare within the specific area you are evaluating.

View Adelaide in the dashboard → Free preview · every bedroom count and property type

What the Yield Table Does Not Capture

• Body corporate levies: Estimated at around $3,748 per year for a 2-bed apartment in this market, not deducted from the gross yields in the table above.
• Capital appreciation: Houses usually outperform apartments on long-term value growth in Adelaide because you own the land, and South Australian land values have driven much of the price growth that compressed yields over the past decade.
• Renovation potential: Houses offer optionality (extensions, granny flats, swimming pools, and in some council areas subdivision) that apartments cannot match.
• Financing constraints: Some lenders restrict mortgages on apartments under 50 sqm or in buildings with a high proportion of investor owners, which can affect both your purchase loan and any future buyer's.
• 4+ bed data breadth: The 4+ bed category bundles 4, 5, and 6+ bedroom listings. In a market the size of Adelaide a small number of premium properties can pull the median in either direction.

Adelaide Sits Well Above National Pricing on a 3-Bed House

Adelaide is a premium-priced market in the national context. The median 3-bed house at around $867,130 sits well above the South Australian median of $759,053 and the national median of $833,886. The flip side is yield: at 2.8% long-term rental yield Adelaide sits below the South Australian state average of 4.0% and the national average of 4.0%. This is the classic appreciation-versus-cash-flow trade-off, and it shapes the house-vs-apartment decision specifically. Investors prioritising capital growth often lean toward houses on land in established suburbs where the underlying site is doing the work. Investors prioritising near-term cash flow tend to tilt toward smaller apartments where the entry price keeps yield numbers workable, accepting that body corporate levies and softer appreciation will offset some of the headline advantage.

Negative Gearing and Depreciation Change the After-Tax Picture

Negative gearing changes the after-tax comparison, particularly for long-term rental. When mortgage interest and operating costs exceed rental income, the loss is deductible against salary income, reducing taxable income at the investor's marginal rate. Adelaide's compressed long-term rental yields, around 3.8% gross on the median 3-bed house, mean many leveraged investors run a paper loss in the early years, and that is precisely where negative gearing kicks in.

The benefit scales with income. At a 30% marginal rate (roughly the $45,000 to $135,000 income band) every $1 of rental loss saves $0.30 in tax. At 37% ($135,000 to $190,000) it saves $0.37. At 45% (income above $190,000) it saves $0.45. So a $10,000 cash loss on a leveraged Adelaide investment property cuts a high-income investor's tax bill by $4,500 in the same year.

Depreciation amplifies the benefit on newer properties. The building depreciation allowance is a fixed 2.5% per year of the original construction cost, available for buildings less than 40 years old. Fixtures and fittings depreciation applies separately to items like air conditioners, carpets, hot water systems, and appliances. Both are non-cash deductions, so they reduce taxable income without reducing actual cash flow. A depreciation deduction of around $28,699 on a recently built Adelaide property at the median price level can convert a small cash profit into a paper loss for tax purposes, which then flows through as a salary offset.

The 50% capital gains tax discount on properties held more than 12 months applies equally to short-term and long-term rental, so it does not differentiate between the two strategies. Short-term rental properties that are profitable do not benefit from negative gearing because there is no loss to offset. The honest framing: negative gearing requires a genuine cash loss, so it is not free money. But for Adelaide's premium market where pre-tax yields are low, the after-tax picture for high-income investors comparing short-term and long-term rental can tip toward long-term rental even when short-term rental shows a higher gross figure. The dashboard calculates your after-tax position including negative gearing and depreciation based on your income, so you can enter your salary to see how the tax treatment changes the short-term rental versus long-term rental comparison for your tax bracket.

Adelaide Short-Term Rental Regulations

Adelaide (C) permits short-term rentals with minimal regulatory restrictions. **Details:** Limited specific City of Adelaide regulations found. State framework: Short Term Holiday Rental Accommodation Bill 2021. Planning approval requirements vary by development plan. Contact City of Adelaide directly for local policies. [View official regulations](https://www.legislation.sa.gov.au/lz?path=/b/archive/short+term+holiday+rental+accommodation+bill+2021_hon+zoe+bettison+mp). The 330 nights figure used in the dashboard's modelling is not a regulatory cap; it is an industry default that allows around 35 days per year for cleaning, turnover, and maintenance gaps. South Australia is an active legislative area for short-term accommodation, and an investor should verify current state and council rules before committing capital. For the methodology behind these figures, see the data sources documentation.

For wider South Australian context, see South Australia Rental Investment Insights. For the highest-yielding suburb inside the Adelaide region, see Lobethal - Woodside Leads Adelaide Yields at 4.4%.

Data reflects market conditions as of April 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.