The country's rental market is experiencing the worst affordability conditions in at least two decades, according to the latest REA Group Rental Affordability Report.
Median-income households earning $124,000 annually could afford just 37% of advertised rentals between July and December 2025, marking a record low since data collection began in 2008.
The findings come as investor confidence in build-to-rent projects rises, driven by expectations that more Australians will rent for longer amid chronic housing undersupply and high prices.
National median rents surged from $420 per week in early 2020 to $650 today – a 55% increase that has vastly outstripped the 25% growth in household incomes over the same period. Rents at the more affordable end of the market rose even faster, up from $280 to $450 per week – a 61% increase.
“Rental affordability has fallen to a record low, with Australian renters facing the toughest conditions since at least 2008,” REA Group senior economist Angus Moore (pictured) said.
Between the December quarters of 2024 and 2025, rent prices grew 5%, offsetting income gains and driving affordability lower still.
Affordability challenges intensify further down the income scale. For lower-income households earning just under $75,000 annually, only 2% of advertised rentals remained affordable, effectively pricing them out of the market entirely.
To afford even one-in-five rentals, these households would need to spend 35.5% of their pre-tax income on rent.
New South Wales and South Australia remain the least affordable states for renters, where median-income households could afford just 25% and 19% of available rentals, respectively. Western Australia and Queensland also present challenging conditions, with median-income households able to afford just 24% and 29% of rentals respectively.
Victoria bucked the trend as the only state where rental affordability improved over the past 12 months, maintaining its position as the most affordable state by a considerable margin.
Melbourne's median advertised rent of $575 per week remains substantially below the national median, having grown 35% since March 2020 compared to 55% growth nationally.
“On top of that, rent prices have grown faster for more affordable properties, making it particularly challenging for low-income renters, who can afford essentially no rentals at just 2%,” Moore said.
By contrast, households at the 70th income percentile, earning about $190,000 per year, could afford 86% of advertised rentals in 2025-26.
Despite these pressures, there are signs conditions may be stabilising across most capital cities. Moore offered cautious optimism: “Rental availability improved over 2025 in most capitals, and rent growth, while still solid, has slowed from the peaks seen in 2022 and 2023.”
However, rental affordability will remain very challenging in the year ahead, the report noted.
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