'You can’t plan life when your home can be gone in an email': Australia's rental crisis laid bare

Australia’s rental market closed out 2025 under historic pressure, with rents sitting at record highs nationwide and the human cost of housing instability becoming increasingly visible.

The national median weekly rent reached $650 in December, rising 1.6 per cent over the quarter and 4.8 per cent over the year, according to the data released Tuesday (20 January) by realestate.com.au.

That equates to an extra $1,560 per year for the average renter, at a time when household budgets remain stretched by cost-of-living pressures.

While the pace of rental growth has slowed compared to the sharp rises seen a year earlier, affordability pressures remain entrenched.

National rents are now $11,960 higher per year than they were five years ago, underscoring how deeply housing costs have shifted in a relatively short period.

Unit rents were the standout over 2025, increasing 6.7 per cent nationally compared to 3.2 per cent for houses, as more renters were pushed toward smaller and more affordable dwellings. Among the capital cities, Hobart recorded the strongest annual rent growth at 9.1 per cent, followed by Darwin at 8.3 per cent and Perth at 7.7 per cent.

Sydney remained the most expensive city to rent, with a median weekly rent of $760, followed by Perth at $700 and Darwin at $650. Melbourne and Hobart were the most affordable capitals at $575 and $573 respectively, although Melbourne’s rents declined slightly over the year, the only capital to record an annual fall.

Despite moderation in growth, rents were sitting at record highs in every capital city by the end of December and are expected to push higher again in 2026, supported by low vacancy rates and continued population growth.

Vacancy rates have lifted slightly but remain very low, according to Domain. All capital cities have vacancy rates below 1.7 per cent, meaning there are still far more renters than available homes.

But behind the headline figures, new research suggests the rental crisis is increasingly defined by emotional and psychological strain, not just affordability.

A system defined by uncertainty

New research commissioned by EqiHome Way paints a stark picture of a housing system marked by instability on all sides. Rather than relying on traditional modelling, the study used Zero-Party Data to capture anonymous, unfiltered sentiment from renters and residential property investors about their lived experience of the rental market.

One response encapsulated the issue succinctly: “You can’t plan life when your home can be gone in an email.”

The research found renters describing a constant state of hyper-vigilance, unable to plan family life, schooling or community connections due to ongoing uncertainty around lease renewals and rent increases.

Investors, meanwhile, expressed concern about the lack of standardised, long-term frameworks that protect retirement outcomes while still providing genuine housing security for tenants.

“It’s the guilt,” one investor respondent said. “You want to grow wealth, but it’s hard not to feel like part of the problem when rents rise. There’s a moral tension between being financially smart and socially conscious.”

According to Andrew Walton, founder of EqiHome Way, the findings challenge the popular narrative of renters and investors being locked in opposition.

“We didn’t want percentages, we wanted the truth,” Mr Walton said.

“What we found is that the so-called tenant-investor war is a distraction from a deeper truth; both sides want long-term stability and the current system simply doesn’t deliver it.”

Domain’s Chief of Research and Economics, Dr Nicola Powell, said Australia’s rental market “is reaching the point where renters simply can’t afford to pay much more, even though competition remains strong.”

“Rents are still at record highs, but household budgets are under pressure. In many areas, renters now need an income of more than $100,000 to rent comfortably.

“The market is no longer moving in one direction. Rent changes now depend heavily on where you live and whether you’re renting a house or a unit.

“Conditions still favour landlord's, with very low vacancy rates across all capital cities, however, increased investor activity and ongoing support for first-home buyers could help ease the shortage of rental homes over time, with the market starting to rebalance in 2026.”

Western Australia under pressure

Nowhere are the pressures more acute than in Western Australia, where a separate report has found renters are paying almost $20,000 more per year than they were just four years ago.

The WA Make Renting Fair Alliance analysed rent increases across the state’s 59 lower house electorates and found the median weekly rent has more than doubled since 2021, rising from $339 to $716. That equates to an average increase of $377 per week, or $19,622 per year.

More than half of the electorates recording the steepest percentage rent increases were located in regional WA, highlighting that affordability pressures are no longer confined to inner-city markets.

Make Renting Fair WA spokesperson Alice Pennycott said the data showed a system failing renters.

“Low- and medium-income renters aren’t just priced out of certain suburbs anymore, they’re priced out of the entire state,” she said.

“WA renters need protection now, not in 10 years’ time.”

Community organisations echoed those concerns. Shelter WA CEO Kath Snell said rising rents were driving renters into debt, overcrowding and homelessness, while Anglicare WA CEO Mark Glasson warned essential workers could no longer afford to live in the communities they serve.

WACOSS CEO Louise Giolitto said the figures were a “clear warning” that urgent intervention was required, pointing to rent stabilisation measures trialled during the pandemic as a potential circuit breaker.

Supply pressures and short-term rentals

While supply constraints remain central to the rental crisis, the challenge is increasingly complex.

Market data shows active Airbnb and short-term rental listings rose from around 152,600 in 2023–24 to approximately 161,300 in 2024–25, a year-on-year increase of about 5.6 per cent.

The growth of short-term rentals has added another layer of competition in already tight markets, particularly in lifestyle and tourism-driven regions, reducing the pool of long-term rental housing available to residents.

Although approvals and construction activity are improving, the pipeline remains insufficient to meet demand in the near term.

As a result, vacancy rates remain low across most markets, reinforcing upward pressure on rents even as growth moderates.

A defining challenge for 2026

As Australia enters 2026, the rental crisis is no longer defined solely by how much rent has risen, but by what uncertainty means for everyday life.

The data suggests rents are likely to keep rising, albeit at a slower pace, while the underlying instability facing renters, and increasingly investors, remains unresolved.

The growing consensus from both market data and lived experience is clear: without frameworks that prioritise certainty, continuity and dignity, the housing system will continue to fail those who rely on it most.