Significantly higher incomes needed to rent in capital cities in 2026

Households will need substantially higher incomes to rent typical properties across Australia’s capital cities in 2026, with median house rents in the combined capitals now requiring an annual household income of about $112,667 to remain within standard affordability settings, according to new analysis from Domain.

The analysis is based on the common benchmark that rent should not exceed 30% of gross household income. Using this measure, Domain has mapped the income needed to rent at suburb level across each capital city in 2026, outlining areas where tenants are likely to have more choice, zones where budgets will be stretched, and locations where affordability constraints are set to shape decisions.

Across the capitals, the income required to rent a median-priced house has risen by 51% since 2019, up from $74,533 to $112,667. That growth has outpaced wage gains over the same period, intensifying pressure on households reliant on the rental market.

Sydney remains the least affordable capital for tenants. To rent a typical house in the city, a household now needs to earn about $135,200 a year while staying within the 30% affordability threshold. Sydney renters are also committing the largest share of their income to landlords, with the average proportion sitting at 24.5%.

Outer ring more provids accessibility

Despite the affordability challenges, the research identifies a band of more accessible markets around most capitals. The most budget-friendly suburbs are typically located 30 to 40 kilometres from the CBD, where households earning between $69,000 and $85,000 can still rent within the affordability guideline. Examples include Melton in Melbourne’s west, Willmot on Sydney’s outer western fringe, and Russell Island in Brisbane’s bayside region.

The study also points to a widening financial gap between renting units and houses in several smaller capitals. Upgrading from a unit to a house in Darwin now requires about $24,300 in additional annual income. Similar jumps are evident in Canberra (around $20,800), Perth (about $17,333) and Adelaide (roughly $17,334), underlining a growing house premium in those markets.

In contrast, the difference between houses and units is relatively small in Sydney and Melbourne. In Sydney, a household needs only about $5,200 more in income to move from a unit to a house, while in Melbourne the gap is about $900. Domain attributes this narrowing to the increased supply of newer, higher-quality units that appeal to middle- and higher-income tenants, pushing unit rents closer to house rents in the largest cities.

“While it’s encouraging that no capital cities are officially under rental stress, the reality is the market remains incredibly tough heading into 2026,” said Joel Bowman (pictured right), senior economist at Domain. “Rents are still rising faster than wages, vacancy rates are at record lows, and as the analysis shows, the gap is widening between where renters want to live, and what they can actually afford.”

“A household needs to earn almost $113,000 to rent a typical capital-city house today. With individual earnings sitting around $80,2000 on average, this puts enormous pressure on single-income renters and shuts many average earners out of most inner and middle-ring suburbs entirely.”

For mortgage advisers, the figures provide a detailed backdrop for discussions with clients considering transitioning from renting to ownership, as well as those holding or seeking investment properties. Rising rental income requirements, differing house-unit premiums across cities and the relative affordability of outer-ring suburbs are likely to influence borrowing capacity assessments, investment strategies and conversations around long-term housing plans.

Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.