Tenants getting slammed by higher rents but landlords not the winners

The pace of rental growth is slowing but in the capital cities Australians with landlords are still paying a shocking $14,700 more to rent a house since the pandemic.

Those downsizing to a unit are faring little better, with SQM Research data analysed by Everybody’s Home revealing that cohort of renters are still putting up an extra $9,600 a year more than at the beginning of 2020.

Renters in Sydney (up by $356 per week for houses, $201 for units) and Perth ($352/$279) were the hardest hit, with annual house rents in both cities having crippling annual rent increases of more than $18,000. Adelaide and Brisbane rents also rose above the capital city average.

Everybody’s Home spokesperson Maiy Azize said the biggest cost-of-living expense for most people living in Australia is keeping a roof over their head.

“The steep rise in rents is pushing more people into severe housing stress and homelessness.

“People are sacrificing the necessities to afford the rent, living in appalling unhealthy conditions because there’s nowhere else for them to go, and ditching important life decisions because of housing insecurity.

“Australians are being priced out of the cities where they work, which can affect the liveability of our cities and the quality of essential services.”

Rents continue to rise, up 1.7 per cent in the September 2025 quarter according to PropTrack.

But there were signs that the pace of growth was slowing.

Cameron Kusher, Director of Economic Research, PropTrack, said there was an easing of rental market pressures that was expected to continue.

“With more stock available for rent, and the cost of renting rising at a pace above inflation over recent years, the capacity to pay rent is now impacting demand.

“Sydney remains the most expensive capital city to rent a home, with the median advertised rent unchanged over the quarter and 5.8 per cent higher over the year, taking rents to $730 per week.

“Perhaps surprising to many would be the fact that the median advertised rent in Melbourne, at $570 per week, was cheaper than all other capital cities except Hobart.

“Although the pace of rental growth is slowing and more stock is available for rent, supply remains low, however, we anticipate more balanced conditions in the coming months.”

CoreLogic’s Research Director, Tim Lawless, attributed the slowdown in rental growth to easing net overseas migration alongside rental affordability pressures forcing a restructuring of demand.

“The latest demographic trends from the ABS showed net overseas migration reduced by 19 per cent from the record highs in the first quarter of 2023.

“The March quarter of 2024 saw 133,800 net overseas migrants arrive in Australia, 31,700 fewer than a year prior, helping to take some pressure off rental demand,” Mr Lawless said.

“Our affordability metrics indicated that the median income household would require around a third of their income to service the median rent value across Australia in June.

“It wouldn’t be surprising if the average household size has continued to increase as group households and multi-generational households become more common in the face of high rental costs.”

Additionally, he said delays in the construction process have seen a portion of aspiring owners staying in the rental market for longer than planned.

“As the backlog of dwellings associated with the HomeBuilder grant moves to completion, we should see some further diminishment in rental demand.”

Landlords not beneficiaries of high rents

While landlords might be challenged over their role in rising rents, most are in a situation not dissimilar to renters, with higher costs overwhelming their investment property income.

Nationally, the gross rental yield has reduced to 3.68 per cent, the lowest since December last year, according to CoreLogic.

As rental growth eases more visibly than value growth, there has now been five straight months where the national home value index has risen more on a monthly basis than the rental index, placing some renewed downward pressure on rental yields.

“With variable mortgage rates for new investors averaging around 6.6 per cent against a backdrop of below average yields, most recent investors are likely to be incurring a cash flow loss on their investment properties unless they have relatively low levels of leverage,” Mr Lawless said.

Although rental supply remains constrained, investor activity has lifted to comprise around 38 per cent of new lending. The pick-up in investor activity could be a factor in supporting rental supply.

No cause for renters to celebrate

SQM Research data released on Tuesday (15 October) showed residential dwelling vacancy rates slightly fell across Australia to 1.2 per cent in September.

The total number of rental vacancies now stands at 37,932 residential properties, a decrease from 39,665 in August 2024. Perth, Canberra, and Hobart plus regional Australia were the main drivers to the decline. While all other capital cities were steady or recorded slight rises.

The REINSW Vacancy Rate Survey results for September 2024, show that residential rental vacancies have increased slightly across the Sydney metropolitan area, however, REINSW CEO Tim McKibbin warned that this lift in the availability of rental accommodation is no cause for celebration.

“These slight increases do not dent the escalating rental crisis,” he said.

Over the last month, the vacancy rate for Sydney overall rose by 0.1 per cent to 1.9 per cent. Vacancies rose in the Inner Ring of Sydney by 0.1 per cent to 2.7 per cent, however both the Middle and Outer Rings remained stable at 1.5 per cent and 1.4 per cent respectively.

“Similarly, the availability of rental accommodation across both the Hunter and Illawarra regions each rose by 0.1 per cent to be 1.4 per cent and 1.5 per cent respectively.”

“Demand continues to drastically outstrip supply and securing appropriate rental accommodation remains a pipedream for many tenants as weekly rents continue to rise,” he said.