Rapid rent growth driven by extremely limited availability amid strong demand has made conditions very challenging for renters for the past few years.
But some positive signs are emerging, with rent growth finally starting to slow.
While this is good news for renters, it’s also useful to step back and look at just how much the rental market has changed over the past five years, and how much more challenging renting has become.
In the five years since the end of 2019, median advertised rents nationally have surged 48%, going from $420 per week to $620 – staggering growth in such a short period.
An underappreciated feature of the surge in rents is that rent growth has actually been stronger among more affordable rentals. The next chart shows rent growth between 2019 and the end of 2024.
The key takeaway is rents have increased by more at the more affordable end. The price for a rental at the 10th percentile (the rent at which 10% of rentals across Australia are cheaper and 90% more expensive) has gone from $280 to $430 – an increase of a staggering 54%.
Geography explains much of this divergence.
Rental markets that were more affordable in 2019, including Perth, Adelaide and regional areas, have seen stronger growth than the most expensive markets – Sydney, to a lesser extent Melbourne.
What this means is that where those most affordable rentals are has changed.
In 2019, 30% of homes across Australia rented for less than $360. Of those homes, most (43%) were, perhaps unsurprisingly, located in regional areas. That’s despite those markets accounting for just 31% of overall rentals.
Melbourne and Sydney accounted for 22% of these rentals – sizeable, but far less than their overall share of the rental market, given these two cities account for 42% of rentals overall.
Particularly notable here is Perth. In 2019, 14% of these more affordable rentals were located in Perth, meaning Perth was significantly overrepresented in this segment of the market since it accounts for just 7% of all rentals across Australia.
Today, that picture has changed radically.
As already discussed, those ‘more affordable’ rentals are far more expensive – that 30th percentile is now $530 instead of $360.
But where those rentals are has changed radically too, because those more affordable markets – regional areas, Perth, Adelaide, Brisbane – have seen such rapid growth in rents.
What that means is that today, far more of the country’s more affordable rentals are in Melbourne, which hasn’t seen as strong growth as other parts of the country. Over the past 6 months, 29% of these more affordable rentals are in Melbourne; that’s actually more than Melbourne’s share of overall rentals (19%).
At the other end, Perth has gone from being overrepresented to underrepresented. Just 3% of Australia’s sub-$530 rentals are in Perth, less than Perth’s share of the overall rental market.
Fortunately for renters, there is some good news. Rental availability, which has been extremely limited for some time, is slowly starting to improve. And rent growth appears to be slowing down. That will, slowly, start to improve conditions for renters.
