Rent prices have surged with wages struggling to keep pace

NATIONAL wage increases have not kept pace with a rapid rise in rental prices, according to a leading property research company.

Cotality’s Chart Park analysis reports national rents have risen 43.9% in the five year period from September 2020 to September 2025.

In the same period, national wages lifted only 17.5% rise.

“The divergence between rents and wages underlined just how challenging conditions have become for tenants,” said Tim Lawless, research director for Cotality.

“For many households, that means a lot less flexibility in the budget and far fewer options about where and how they live.

“The widening gap marks a sharp reversal of the previous five‑year period, when wages were generally growing faster than rents across most states and territories.”

Before the pandemic, renters in many parts of Australia were seeing wages grow a little ahead of rents, or at least keep pace, Lawless said.

“Since 2020, a combination of tight vacancy rates, smaller household sizes and sluggish new housing supply has pushed the market into a very different phase, one where rents are clearly in the driver’s seat.

“Since then, tight rental markets, low vacancy rates and limited new supply have combined to push rents sharply higher while incomes have struggled to keep up.”

Western Australia has recorded the steepest rental increases of any jurisdiction, with rents soaring 66% over the past five years compared with an 18.5% rise in wages.

The Australian Capital Territory is the only market where rent and wage outcomes have been broadly aligned over the period, with rents up 18.5% and wages 17.8% higher.

In the ACT, income growth has managed to track rental growth more closely, which has helped contain the deterioration in affordability compared with other parts of the country

After a brief period where rental growth appeared to be easing, the latest data shows conditions firming again.

“Over the 12 months to September 2025, national rents rose 4.3%, outpacing a 3.4% rise in wages, accelerating further to a 5.4% annual increase in the cost of renting over the 12 months to January 2026,” Lawless said.

“The fact that rental growth is reaccelerating, even after such a large cumulative increase since 2020, is a real concern.

“It suggests demand for rental accommodation still far exceeds available supply and that renters are facing an even larger portion of their income just to keep a roof over their heads.”

Rental conditions were unlikely to normalise quickly without a sustained lift in supply, according to Lawless.

“With vacancy rates still around record lows in many markets and new housing completions running below what is needed to meet population growth, it is hard to see rents materially easing in the near term,” Lawless said.

“Unless wage growth accelerates meaningfully, or we see a step‑change in rental supply, the risk is that affordability will deteriorate further for lower‑income households in particular.”

Policy measures that support additional housing supply, including more build‑to‑rent projects, incentives for private investment, and planning reforms that enable greater density in well‑located areas, would be critical to easing the pressure.

“Closing the gap between rent and income growth will require a coordinated effort across governments, industry and investors.

“The sooner we can bring more supply to market, the sooner renters will start to see some relief.”