Low listings and rising rents highlight growing problem
Australia’s rental sector recorded faster growth at the end of 2025, with Cotality’s latest Quarterly Rental Review showing national rents rose 1.3% in the December quarter, compared with 0.9% in the preceding three months.
The stronger finish to the year lifted annual rental growth to 5.2%. That was higher than the 4.8% gain in 2024 but still below the period from 2021 to 2023, when rents were increasing at more than 8% a year.
Cotality reported that limited stock remains a key driver of rental price pressures. Across the December quarter, national rental listings were about 11% lower than a year earlier and sat 17% beneath the previous five-year average.
According to the review, the national median rent reached $681 per week by the end of 2025. That represents an increase of $204 per week over five years, a cumulative rise of 42.9% since December 2020. Vacancy rates dropped to 1.7%, well below the pre-COVID decade average of 3.3%, reflecting the decline in available listings.
Source: Cotality
Regional areas continued to edge ahead of the capitals, posting annual rental growth of 6.2% compared with 4.8% across the combined capital cities. Among individual cities, Sydney remained the most expensive capital, with median dwelling rents at $817 per week, while Hobart was the lowest at $601 per week.
Darwin recorded the strongest annual rent rise at 8.2%, followed by Hobart at 7.2%. Melbourne had the smallest annual increase among the capitals, at 2.9%.
Source: Cotality
For mortgage professionals, the figures point to ongoing pressure on rental households and potential implications for serviceability assessments, investor demand and portfolio risk, particularly in markets with very low vacancies.
“The ongoing growth in rental costs is bad news for renters, with Cotality’s national rental index surging 42.9% over the past five years, adding approximately $204 per week to the median rental value,” said Tim Lawless (pictured right), research director at Cotality.
“The reacceleration in rental values is also bad news for inflation and the cash rate outlook as rental costs hold a significant weight in the CPI calculation.”
Cotality’s data also show that, in the five years prior to this period, rents rose by only 7.5%, or $33 per week. Based on affordability measures to September, households are now allocating a record 33.4% of their pre-tax income to rent, underlining the strain on tenants and the broader cost-of-living backdrop.
For lenders and brokers, the combination of high rental outlays and subdued vacancy rates may shape borrowing capacity, refinancing decisions and the relative appeal of renting versus buying as interest rate expectations evolve.
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