Australia’s rental market continues to send clear and consistent signals. Whether you’re renting or investing, conditions remain tight nationwide, and the data suggests these pressures are unlikely to ease quickly.
Rental conditions remain tight
According to Cotality data, rental conditions across the country remain constrained. Rents rose 5.2% in 2025, accelerating from 4.8% the year before, as limited housing supply continues to underpin demand. While the pace of growth may appear modest on paper, the compounding effect over multiple years is increasingly felt by households.
The underlying issue is supply. New housing delivery has struggled to keep pace with population growth, while investor stock remains limited in many regions. As a result, even small shifts in demand can have an outsized impact on rents.
Listings highlight the supply challenge
Rental listings clearly illustrate the imbalance. In the December quarter, national rental listings were 11% lower than a year earlier and 17% below the five-year average. Fewer available properties mean greater competition among tenants, shorter leasing times, and limited negotiating power.
For many renters, this environment translates into rising asking rents and fewer alternatives if prices move higher at renewal time.
What this means for renters
Steady rent increases can shift the rent-versus-buy decision faster than expected. While renting may feel manageable today, the outlook can change after one or two lease renewals—particularly if wage growth does not keep pace with housing costs.
In some cases, renters find themselves paying more in rent than a potential mortgage repayment, yet without the security or long-term benefits of ownership. This doesn’t mean buying is right for everyone, but it does mean that revisiting long-term housing plans sooner rather than later can be valuable.
What this means for investors
For investors, tight vacancy rates continue to support demand and cash flow, even as borrowing costs and yields adjust. However, the current environment places greater emphasis on structure rather than surface-level returns.
The interaction between rent growth, loan structure, buffers and holding costs matters more than headline yields alone. Investors who plan for rate variability, cash-flow resilience and long-term sustainability are better positioned than those relying purely on optimistic rent assumptions.
Planning with today’s numbers
The rental market is unlikely to normalise quickly. Limited supply, population growth and constrained construction pipelines suggest pressure will remain a feature of the market for some time.
If rising rents are prompting you to think about housing certainty, or if you’re weighing up a property investment under current conditions, it’s worth reviewing your options with realistic assumptions. Decisions grounded in today’s numbers—rather than past conditions—can make a meaningful difference over the long term.
If you’d like tailored guidance based on your circumstances, feel free to get in touch. I can help you assess your position and map practical next steps in a changing rental landscape.
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