Low availability rates and population growth drive sharp rent hikes in major cities
Australia’s most expensive rental markets are bearing the brunt of the country’s worsening housing crisis, with Perth, Sydney and Brisbane leading in annual rent increases since 2020.
Perth, where vacancy rates have reached historic lows, recorded the sharpest rent jump, PropTrack data, showed with tenants paying an extra $16,640 annually over the past five years – the highest increase of any capital city. Greater Sydney and Brisbane followed, each with rent rises of approximately $13,000 a year.
These figures highlight the growing affordability pressures in key urban centres, where demand for housing continues to outstrip supply.
PropTrack economist Anne Flaherty (pictured) said the pace and scale of the rent increases were significant. “What really jumps out is the magnitude of the increases we’re seeing and how much of people’s incomes are being spent just on the cost of rent,” she said.
Flaherty attributed the rental strain to population growth, slow housing supply, and the extended time it takes to save for a home deposit – factors that keep more people in the rental market longer.
“There’s a whole multitude of factors for why demand for rental properties has increased,” she said. “Obviously population growth is a massive factor. But another factor is that it’s taking longer and longer to save a deposit to buy your first home, which means people are being trapped in the rental market longer.”
Sydney and Brisbane also remain among the costliest rental markets, where population growth has increased demand faster than homes can be delivered. In contrast, Melbourne’s annual rent increase of $8,580 since 2020 has been more modest – a trend attributed to its higher pre-COVID housing density.
“This is incredible evidence on the impact that higher supply has,” Flaherty said. “One of the reasons why rent growth and home price growth has been slower is because Greater Melbourne has been relatively better than the other capitals at building new homes.”
Looking ahead, PropTrack expects rent growth to moderate, though not reverse.
“Our expectation is that it’s going to fall short in the coming years in most markets,” Flaherty said. “We don’t think that the pace of rent growth we saw over 2022-2023 is going to be repeated, however it’s very unlikely we’re going to see rents move backwards as a whole.”
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