Overview
- Rents have surged nearly three times faster than wages over the past five years, with national rents up 43.9% compared with 17.5% wage growth, pushing rental affordability to record lows.
- Western Australia is the epicentre of the rental crunch, with rents soaring 66% in five years.
- Rental pressures are intensifying again, with annual rent growth accelerating to 5.4% to January 2026, despite already stretched household budgets and a brief easing earlier in 2025.
Australian rents have surged almost three times faster than wages over the past five years, pushing rental affordability to record lows and stretching household budgets across the country, according to Cotality’s latest Chart Pack.
Cotality’s analysis shows national rents have jumped 43.9% over the five years to September 2025, compared with a 17.5% rise in wages over the same period.
Tim Lawless, Cotality research director, said the divergence between rents and wages underlined just how challenging conditions have become for tenants.
“For many households, that means a lot less flexibility in the budget, and far fewer options about where and how they live,” Mr Lawless said.
The widening gap marks a sharp reversal of the previous five year period, when wages were generally growing faster than rents across most states and territories.
“Before the pandemic, renters in many parts of Australia were seeing wages grow a little ahead of rents, or at least keep pace,” Mr Lawless said.”
“Since 2020, a combination of tight vacancy rates, smaller household sizes and sluggish new housing supply has pushed the market into a very different phase, one where rents are clearly in the driver’s seat.”
“Since then, tight rental markets, low vacancy rates and limited new supply have combined to push rents sharply higher while incomes have struggled to keep up.”
Cumulative change in wages v rents, National
Western Australia leads the rental surge
Western Australia has recorded the steepest rental increases of any jurisdiction, with rents soaring 66% over the past five years compared with an 18.5% rise in wages.
“Nowhere is the pressure more evident than in Western Australia, where rents have climbed by around two thirds in just five years,” Mr Lawless said.
“Even with wages growing a little faster than the national average, they have come nowhere near keeping up with housing costs in that state.”
The Australian Capital Territory is the only market where rent and wage outcomes have been broadly aligned over the period, with rents up 18.5% and wages 17.8% higher over the five years to September 2025.
“In the ACT, income growth has managed to track rental growth more closely, which has helped contain the deterioration in affordability compared with other parts of the country,” Mr Lawless said.
Rental growth reaccelerates as affordability hits new lows
After a brief period where rental growth appeared to be easing, the latest data show conditions firming again. Over the 12 months to September 2025, national rents rose 4.3%, outpacing a 3.4% rise in wages, accelerating further to a 5.4% annual increase in the cost of renting over the 12 months to January 2026.
“The fact that rental growth is reaccelerating, even after such a large cumulative increase since 2020, is a real concern,” Mr Lawless said.
“It suggests demand for rental accommodation still far exceeds available supply, and that renters are facing an even larger portion of their income just to keep a roof over their heads.”
Cotality’s latest housing affordability metrics for the September quarter 2025 show rental households are now dedicating an average of 33.4% of their pre tax income to rent -a record high. That compares with a decade average of 29.2% and a recent low of 26.2% in the September quarter of 2020.
Outlook: rents likely to keep outpacing wages
Mr Lawless said rental conditions were unlikely to normalise quickly without a sustained lift in supply.
“With vacancy rates still around record lows in many markets and new housing completions running below what is needed to meet population growth, it is hard to see rents materially easing in the near term,” he said.
“Unless wage growth accelerates meaningfully, or we see a step change in rental supply, the risk is that affordability will deteriorate further for lower income households in particular.”
He said policy measures that support additional housing supply, including more build to rent projects, incentives for private investment, and planning reforms that enable greater density in well located areas, would be critical to easing the pressure.
“Closing the gap between rent and income growth will require a coordinated effort across governments, industry and investors. The sooner we can bring more supply to market, the sooner renters will start to see some relief.”
Other highlights from the February Housing Chart Pack include:
• Australia’s residential real estate total market value rose to $12.4 trillion in January.
• National dwelling values rose 2.4% over the quarter and 9.4% annually, adding an estimated $78,699 to the median Australian dwelling value over the last 12 months.
• Although the monthly pace of growth has slowed, a clear two-speed dynamic remains at play across the capital city housing markets. The mid-sized capitals are all recording monthly gains above 1.0% while the largest capitals have seen growth slow to just 0.1% to 0.2%.
• Cotality estimates that around 556,650 sales have transacted over the 12 months to January, a 4.1% increase in the number of home sales nationally.
• Median time on market was 29 days nationally, down from 34 days a year ago, with capital city homes selling fastest in Perth (nine days) and slowest in Canberra (42 days).
• Discounting rates are holding close to record lows, but the trend has levelled. Capital city vendors are reducing their asking prices by a median of 2.9% to reach the contract price, while negotiation levels are more substantial with a median of 3.2% across Regional Australia.
• With a softer than average flow of new listings to market, alongside higher levels of purchasing activity relative to a year ago, the volume of advertised stock remains well below average. Nationally, inventory levels were 17.8% lower than at the same time last year, ranging from a 36.9% drop in Perth to a 1.2% reduction in Regional South Australia.
• The flow of new listings remains low across most of Australia. Across the capitals, only Melbourne (4.5%) and Canberra (7.2%) have seen the trend in new listings track higher than a year ago.
• Nationally, rents lifted 5.4% over the 12 months to January. Six months ago, rents were rising at the annual pace of 3.4%.
• Rents have increased across every broad region of Australia, ranging from a 10.1% jump in regional WA to a 2.8% increase in Canberra.
