Pressure in the rental market continues to build, with tenants facing higher weekly costs and limited availability across much of the country. Recent figures confirm that rents have pushed to new national highs, reinforcing the challenges faced by renters and the strength of underlying demand.
The median national rent increased by 1.6% in the December quarter to reach $650 per week. Over the past 12 months, rents have risen by 4.8%, equating to an additional $1,560 per year for the average tenant. These increases are significant, particularly when combined with broader cost of living pressures.
Capital city median rents now sit at $650 per week, while regional rents are slightly lower at $590 per week. However, regional rents have risen by 7.3% over the past year, outpacing growth in many metropolitan markets. This reflects strong migration into lifestyle regions and ongoing supply constraints outside major cities.
According to REA Group senior economist Anne Flaherty, rental growth is expected to continue, albeit at a slower pace than the sharp rises seen in recent years. Her outlook suggests that rents are likely to reach new record highs in 2026, underpinned by population growth, low vacancy rates, and constrained new supply.
The composition of rental demand is also shifting. Nationally, unit rents increased by 6.7% over the year, compared with 3.2% growth for houses. This gap highlights where affordability pressures are most acute. Apartments, particularly in inner city and inner fringe locations, are often the most accessible option for renters, driving stronger demand and faster price growth.
Capital city rental levels vary widely. Sydney remains the most expensive market, with a median rent of $760 per week. Perth follows at $700, reflecting strong population growth and limited supply. Brisbane sits at $670, Darwin at $650, Melbourne at $575, and Hobart at $573. While Melbourne and Hobart remain relatively more affordable, both markets continue to experience upward pressure.
For investors, rising rents improve yield potential but also increase competition for well located, well specified properties. Not all rental stock benefits equally from market wide growth. Properties with functional layouts, proximity to transport and employment, and low ongoing maintenance tend to outperform.
At the same time, affordability constraints are reshaping tenant behaviour. Households are increasingly willing to compromise on size or location to secure stable accommodation, supporting demand in attached dwellings and secondary locations.
Rental growth also feeds directly into broader market dynamics. Higher rents can support higher prices, particularly in investor focused segments, but they can also intensify affordability challenges for first home buyers trying to save deposits while renting.
Understanding these pressures is essential for buyers assessing cash flow, long term holding costs, and tenant demand. Markets experiencing strong rental growth but limited supply are likely to remain competitive, even if broader price growth moderates.
As rents continue to edge higher, strategic property selection becomes increasingly important. Buyers who focus on fundamentals rather than chasing headline yields are better placed to manage risk and capture sustainable returns.
