Rents Surge Beyond Wages, Deepening Rental Affordability Crisis
Australia is experiencing a significant rental affordability crisis, with rents surging well beyond wage growth. In the last five years, national rents have increased by 43.9%, while wages rose only 17.5%. This divergence has pushed tenants’ average rent burden to 33.4% of their pre-tax income, marking a record high.
Key Statistics on Rental Affordability
- Rent Increase: 43.9% (2018 – September 2025)
- Wage Growth: 17.5% (same period)
- Average Rent Burden: 33.4% of pre-tax income
- Decade Average: 29.2%
- Recent Low: 26.2% (September 2020)
Impact of Changing Market Conditions
The analysis by property research firm Cotality highlights the escalating financial pressures on Australian households. According to Tim Lawless, the research director at Cotality, many families are facing diminished flexibility in their budgets due to rising rent costs.
Before the pandemic, wages tended to keep pace with rents in many regions. However, since 2020, factors such as tight vacancy rates and sluggish housing supply have reversed this trend. Now, rents are driving market dynamics, creating strain for renters.
Regional Insights on Rental Growth
Western Australia has seen the most severe rent increases, recording a 66% rise in five years against a wage growth of 18.5%. In contrast, the ACT displayed stability, with rents rising 18.5% and wages up 17.8%.
Emerging Rental Pricing Trends
As of January 2026, national rental growth accelerated to 5.4%, up from 3.4% six months prior. This rise indicates escalating demand for rental housing, exacerbated by very low vacancy rates across various regions.
Future Outlook and Challenges
The federal government anticipates Australia will fall short by over 260,000 homes against its goal of delivering 1.2 million new homes by 2029. Experts assert that without a significant increase in housing supply, rental prices are likely to continue climbing, further straining low-income households.
Lawless stresses the importance of coordinated efforts among governments, industry, and investors to bridge the gap between rents and income growth. He emphasizes the necessity for initiatives like build-to-rent developments and planning reforms to address the crisis effectively.
Conclusion
The ongoing rental affordability crisis remains a pressing issue for many Australians. Unless wage growth aligns with rental price increases or new housing supply rises significantly, the burden on renters is likely to intensify.
