Market enters period of stability after years of rent increases
Annual rent growth in Australia’s major cities has paused for a second straight quarter, new data has shown. This is the first time in almost a decade that rental prices have held steady for such a period, indicating an end to the recent stretch of rapid increases.
Domain’s September Quarter Rent Report indicates that house rents in the combined capitals have not changed for five quarters, the longest stretch of stability since 2014-16. This has resulted in annual growth holding at zero for the second quarter in a row – a milestone not seen in nearly 10 years.
Distinct trends are emerging across the capitals. House rents are stable in most cities. Melbourne is experiencing its longest period without change in over 10 years, while Adelaide’s pause is the first in five years. Perth has recorded its first steady quarter in more than a year, and Sydney and Canberra have also seen rents stall.
Unit rents, which had previously absorbed much of the demand from those seeking more affordable options, have also plateaued for two quarters. Annual growth for units has slowed to 3.2%, the lowest since 2021. Despite this, rents remain at record levels in every capital except Perth and Hobart, where unit rents have declined. Only Sydney, Brisbane and Darwin continue to post quarterly gains for units.
Brisbane and Darwin stand out as the only capitals where both house and unit rents are still rising, with growth rates accelerating compared to the previous quarter and the same period last year. Meanwhile, Melbourne, Adelaide and Canberra have seen both house and unit rents remain unchanged this quarter, with Adelaide and Canberra each recording rare dual freezes.
Vacancy rates have edged up but remain close to historic lows, maintaining pressure in most capitals. Hobart and Darwin, in particular, continue to present significant challenges for those seeking rental accommodation.
While demand remains strong and vacancies are tight, affordability constraints, slower population growth, and increased investor activity are contributing to a more balanced market.
Policy changes, such as the expansion of the First Home Guarantee, which enables more buyers to enter the market with a 5% deposit and no mortgage insurance, may gradually shift some long-term renters into homeownership, potentially easing rental demand over time.
“After three years of relentless price hikes, we’re finally seeing a much-needed pause across Australia’s major cities,” said Nicola Powell (pictured right), chief of research and economics at Domain. “For the first time in nearly a decade, annual rent growth has stalled for two consecutive quarters, offering renters a rare moment of stability.
“House rents stalled first, and now unit rents have followed as tenants reach their affordability limits.
“With the expanded Australian Government 5% Deposit Scheme, more renters are also likely to transition into homeownership, which could ease rental demand over time. However, vacancy rates below 2% mean landlords could still hold the upper hand, keeping the market competitive and challenging.”
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