Living costs bite into rental market
National rental growth slowed to 0.5 per cent in the September quarter, an industry review has revealed. Vacancies were up as cost-of-living continues to cut deep.
AFFORDABILITY and cost-of-living pressures have taken the heat out of Australia’s rental market, Cotality’s latest Quarterly Rental Review suggests.
It shows a marked slowdown in rental growth during the September quarter as vacancy rates rose to their highest level since January.
National rents increased 0.5 per cent in the three months to September, compared with the 1.6% increase in the June quarter and 2.1 per cent in the March quarter.
Annual rental growth also eased from 5.9 per cent to 5.5 per cent taking the national median dwelling rent to $713 a week.
The national vacancy rate increased from 1.7 per cent in the March and June quarters to 2.1 per cent in September, its highest level since January 2025.
However, that is well below the pre-COVID decade average of 3.3 per cent
Cotality Research Director Tim Lawless said stretched rental affordability and cost-of-living pressures were increasingly influencing demand, as renters adjusted household size and sought more affordable accommodation.
Over the last five years unit rents have increased 44.3 per cent or $208 a week, compared with 36.6 per cent for houses, equivalent to $195 a week.
“Rental growth was strongest through the pandemic when average household sizes fell sharply as people sought additional space,” Mr Lawless said.
Then came a “second wind” as international borders reopened and rental demand increased without a commensurate uplift in supply.
“The consequence is that renters are reaching an affordability ceiling,” Mr Lawless added.
“Our June data showed rental households were dedicating about 34 per cent of their pre-tax income towards rent, the highest level on record.
“With rental affordability so stretched and broader cost-of-living pressures, rental demand is likely to be restructuring as people form larger households, stay in the family home for longer or look further afield for more affordable accommodation.”
Conditions varied substantially across the capitals, with Sydney recording the only quarterly decline in dwelling rents, down 0.4 per cent its first quarterly fall since December 2024.
Sydney recorded a vacancy rate of 2.5 per cent compared with 1.8 per cent a year earlier.
Despite the decline, Sydney is Australia’s most expensive rental capital with a median rent of $843 a week.
Houses in the harbourside suburb of Vaucluse are the nation’s most expensive, renting for $2,362 a week.
Darwin recorded the strongest growth nationally, with rents increasing 5.8 per cent over the quarter and 11.6 per cent for the year.
Its median dwelling rent increased to $774 a week, third behind Sydney and Perth at $798.
Rents rose 1.7 per cent in Adelaide and 1.3 per cent in Brisbane for the period, while Canberra and Hobart were broadly flat at 0.1 per cent and 0.2 per cent respectively.
Hobart’s vacancy rate has more than doubled to 3.1 per cent up from 1.3 per cent a year earlier, while Adelaide remains Australia’s tightest rental market with a vacancy rate of 1.4 per cent.
NB: Cotality research director Tim Lawless will be a special guest panellist at Australian Conveyancer’s What’s Next? Conference on Tuesday, November 17. He will provide a national insight into the state of the property industry. Discover what’s ahead in 2027.
https://www.australianconveyancer.com.au/event/whats-next-2026/
