Australia’s rental market is showing no signs of relief for tenants, with national rent growth reaccelerating.
New data from Cotality shows that seasonally adjusted rents posted a 1.4% rise in the three months to the end of September 2025, the largest quarterly increase since June last year, and a significant uptick from the 1.1% lift recorded in June 2025.
That means rents have risen 4.3% over the year to September - much faster than inflation - as vacancy rates plunged to fresh record lows.
The data is contained in Cotality’s latest Quarterly Rental Review, which warns that rental appreciation is not only bad news for renters but could also complicate the inflation and cash rate outlook.
The details
Cotality economist Kaytlin Ezzy says the increased momentum in rental growth around Australia is being spurred by a persistent shortage in rental supply, highlighted by the record-low vacancy rate seen nationally in September.
“Ongoing scarcity in ‘for rent’ listings, coupled with continued strength in rental demand, has pushed the national vacancy rate to a new record low of 1.47% - less than half the pre-COVID decade average of 3.3%,” she says.
“Limited supply continues to be a major catalyst in rising rents, with the number of rental listings tracking approximately 25% below the previous five-year average nationally for this time of year,” Ms Ezzy says.
Despite investors making up a larger share of new mortgage lending in recent years, the report says this hasn’t translated into additional rental stock.
“Supply is particularly tight in the unit sector, especially in Sydney, which recorded both a new record low vacancy rate across its unit sector and broader dwelling rental market in September at 1.35% and 1.64% respectively.”
City rents break through $700 a week
Cotality says the median weekly rent across Australia’s combined capital cities surpassed the $700 mark for the first time in August.
Sydney remains by far the most expensive city, with the typical dwelling renting for $807 per week, with rents rising 3.5% over the year.
Hobart maintained its title as the country’s most affordable city, with a median weekly rental value of $584.
However, rent growth is strongest in Darwin, with a 7.6% annual rise, followed by Hobart (6.2%) - a turnaround after several years of weaker performance.
Perth and Brisbane both posted 5.6% annual rent growth, while Melbourne remained the laggard at 1.4%.
Adelaide was the only rental market to buck the trend, easing 0.9% to 3.9% annual growth despite having the country’s lowest vacancy rate at 0.93%.
The Cotality Rental Review says stretched affordability is now acting as a cap in the South Australian capital:
“Adelaide rental households, on average, were dedicating 34.7% of their pre-tax income to rental payments, the highest of any capital city.”
Regional rents remain somewhat more affordable, holding below the $600 mark, with the typical regional dwelling renting for $591 per week.
Houses regain momentum as renters consolidate
Nationally, unit rents climbed 4.4% over the year to September, compared with a 4.3% rise for houses.
But Cotality says “growth dynamics are shifting,” with house rents now rebounding faster quarter-to-quarter.
The data analytics firm attributes the change partly to the sharp squeeze in unit vacancies - now just 1.16% nationwide - and to tenants “recalibrating”.
“Units no longer offer the same affordability advantage they once did,” Cotality says, noting renters are increasingly consolidating into larger homes “as a way of managing rising costs.”
Despite the steady rise in rents, national gross rental yields have slipped slightly to 3.65%, their lowest level since November last year.
Capital city yields fell to 3.44%, while regional yields eased to 4.36%.
Cotality expects yields to tighten further in the coming months as home values continue to rise faster than rents, “due to low advertised supply, potential additional rate cuts and strong demand from the expanded Deposit Guarantee Scheme.”
The outlook
Cotality’s Rental Review shows that while rental growth has eased from the breakneck pace of the pandemic years, the underlying pressures of limited housing supply, strong population growth and persistent affordability constraints show no sign of abating.
“The news that rents are once again rising at a higher rate will be unwelcome news for renters already struggling with the 43.8% or $204 per week increase in rents seen nationally over the past five years,” Cotality economist Kaytlin Ezzy says.
“But it’s probably also unwanted news for homeowners and landlords servicing a mortgage.”
With “rents paid” a key component of Australia’s official Consumer Price Index (CPI) or inflation measure, the increased pace of rental value growth seen in recent months could push inflation higher.
“Along with some renewed upwards pressure from the cost of new dwellings, this renewed momentum in rents may lead to inflation exceeding RBA forecasts, which could keep the cash rate elevated for longer,” she says.
For renters, that means the squeeze is set to continue - and for the Reserve Bank, it’s another complication in the central bank’s battle to keep inflation under control.