‘Bad news for renters’: prices rise as shortage deepens
Tenants did not get any relief in 2025 as vacancy rates tightened and prices rose further.
Rents rose 5.2 percent over the year, bringing the national average to $681 a week, real estate data firm Cotality said in its latest Quarterly Rental Review, published on Wednesday.
Since the outbreak of the COVID-19 pandemic, renters have experienced a dramatic deterioration in affordability.
According to Cotality data, the rental index has increased by 42.9 percent in the last five years, adding an extra $204 per week to the average rental value.
Five years ago, rents were rising only 7.5 percent, or $33 a week.
Rents increased by 0.9 percent in the three months to September and increased by 1.3 percent compared to the December quarter.
Cotality research director Tim Lawless said the re-acceleration was bad news for renters, inflation and the outlook for interest rates.
“There’s not a lot of sign of any real reduction in the scarcity of rental stock, which of course means there’s continued upward pressure on rents,” he told AAP.
Vacancy rates nationwide fell to 1.7 percent in December; this was down from 2.1 percent the previous year and well below the pre-COVID decade average of 3.3 percent.
Despite efforts to ease housing affordability, listings were down 11 percent from the previous year.
Mr Lawless said that rather than rental stock being emptied by investors – property investor activity hit record levels in late 2025 – the contraction in vacancy rates was due to stock being absorbed by high demand.
High house values are making it harder for first home buyers to get on the property ladder, trapping them in the rental market for longer.
Despite the gradual decline in net overseas migration, migration levels are still higher than pre-COVID.
New home completion rates remain below the pre-pandemic decade average.
“So we are not seeing enough rental stock coming onto the market at a time when demand is so high,” Mr Lawless said.
Adelaide remained the most congested rental market in the country, with a vacancy rate of just 1.1 per cent.
Rents in South Australia’s capital increased by 3.4 per cent over the year.
The sharpest annual increase in rents was in Darwin, with an increase of 8.2 per cent, albeit from a lower base.
Melbourne experienced the smoothest growth, up 2.9 per cent, with average rent rising to $624.
Sydney, the country’s most expensive market, rose 5.3 percent to an average of $817 a week.
Vaucluse, in the city’s eastern suburbs, was the most expensive suburb to rent in the country, with a house in a seaside residential area earning tenants $2,310 a week.
Despite ongoing shortages, Mr Lawless thinks rent increases will eventually wear off.
He said households spend, on average, more than a third of their pre-tax income on rent.
Tenant renters will increasingly have to rent home offices or move in with their parents to make ends meet, increasing average household size and helping reduce rental supply.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
