Mentone Beats All Bayside Rivals on Rental Yields, Attracting Investors

Mentone is posting the strongest gross rental yields of any suburb in its immediate bayside corridor, with median weekly rents for two-bedroom units now sitting at $580 and median purchase prices for the same stock hovering around $620,000, a combination that pushes gross yield to approximately 4.9 percent. That figure, drawn from listings and leasing activity tracked through the first half of 2026, puts Mentone ahead of neighbouring suburbs whose values have climbed faster than rents over the past three years.

The timing matters. Interest rates have held elevated through most of 2025 and into 2026, squeezing cash flow across investor portfolios and forcing buyers to be far more selective about entry points. Suburbs where capital growth outpaced rental growth in the post-2022 boom are now producing yields in the low-to-mid threes. Mentone's relative affordability, particularly in the unit and older-villa segment, means the income return still pencils out for investors who need the rent to cover a meaningful portion of holding costs. That practical arithmetic is driving renewed inquiry.

Where the Numbers Are Coming From

The yield story is concentrated in a specific pocket. The streets running between Mentone Parade and Balcombe Road, roughly between Como Parade West and the Mentone railway station precinct, contain a high proportion of 1960s and 1970s brick walk-up units. These blocks, typically six to twelve dwellings, have not attracted the same renovation premium as the beach-facing streets further south, which means purchase prices have stayed comparatively modest while rents have moved up with broader market tightening.

The Mentone railway station itself is a significant driver. Direct services into the CBD run frequently during peak hours, and the station's Grade Separation Project, funded under the Level Crossing Removal Program, completed works that buried the rail corridor and returned street-level space to pedestrian use along Mentone's main commercial strip. That infrastructure upgrade made the immediate station precinct more walkable and lifted the amenity profile of addresses within 400 metres, without yet producing the price spike that typically follows such works in denser markets. For investors, that lag is the window.

Mentone Grammar on Mentone Parade continues to anchor family demand in the suburb, generating consistent tenant inquiry from staff and visiting families who want short-to-medium term leases. The Mentone Life Saving Club on The Esplanade draws a younger, active demographic. Both institutions sustain a broad renter base that keeps vacancy low, local property managers report typical vacancy periods of under three weeks for well-presented two-bedroom stock, compared with four to six weeks being normal elsewhere in the corridor.

What the Data Actually Shows

Across the first quarter of 2026, the median days-on-market for rental listings in Mentone's unit segment was 18 days. New lease agreements signed between January and March 2026 averaged $572 per week for two-bedroom units, up from $535 for the equivalent period in 2025, a 6.9 percent annual increase. Purchase prices for comparable stock moved less sharply, with the median sitting at $615,000 in March 2026 against $595,000 twelve months earlier, a 3.4 percent rise. The gap between those two growth rates is precisely what makes the yield calculation attractive.

Investors who bought older unit stock in the Balcombe Road corridor in late 2023 and early 2024, when prices briefly softened, are now holding assets producing gross yields close to 5.2 percent on their entry price. That is not a figure being replicated easily anywhere else in the bayside patch at current values.

For buyers considering entry now, the practical calculus involves accepting that some of the best-priced stock will require a building inspection and attention to owners corporation levies, which in older blocks can be substantial. The smarter approach is targeting blocks where levies are current and a recent maintenance schedule has been completed, those buildings carry lower risk and are leasing fastest. Engaging a buyers' agent familiar specifically with the Mentone unit market, rather than one working the broader bayside corridor, will matter. The yield gap between the right and wrong block on the same street can be half a percentage point.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.