Rent hits record highs in every capital city – except Melbourne
Rents are again at record highs in every capital city in Australia – except Melbourne – despite rental growth generally continuing to slow nationwide.
But the latest Domain Rent Report reveals a greater-than-ever divergence across those cities.
While Melbourne has the cheapest house rents in the country at a median of $580 a week, and Sydney the highest at $800, Brisbane has seen the biggest jump over the last quarter of 3.1 per cent to $670.
“We are now seeing much more fragmentation in rents both between cities and between houses and units,” Domain chief of research and economics Dr Nicola Powell says.
“The only capital city where we’ve seen an actual reacceleration in rental growth has been Brisbane, for both houses and units.
“But everywhere else we are still seeing a slowdown and stabilisation in the rate of growth in rents as, because of how high rents are, tenants are now limited in what more they can pay. They’ve really hit that affordability ceiling.”
The persistent record highs will still be crushing news for tenants who’ve already endured the sharpest rental hikes, post-COVID, in history.
As a result, according to industry experts, many are moving to other cities in search of more affordable homes, relocating further from city centres to work remotely, or giving up entirely and moving long-term into share houses.
“That’s a worrying trend we’re now seeing: investors being funnelled into knocking down houses and rebuilding them into ‘rooming houses’ with seven bedrooms and seven bathrooms with rooms that can be let individually,” Steve Fitzsimon, director, business growth at Melbourne Real Estate, says.
“For investors, it means a higher rental yield as a way to combat higher costs like land tax, and at least tenants can get a clean room at an affordable rent. But what will these buildings look like in 20 years?”
The Domain report for the December quarter 2025 has found that house rents rose by 2.3 per cent across the combined capital cities nationally for that three-month period; the same as for the year.
For units, rents remained at the same level nationally for the quarter, and rose 3.2 per cent on the year.
In the most expensive city, Sydney, house rents increased by 1.3 per cent over the quarter and 3.9 per cent annually to a record $800, while in Perth, Canberra and Darwin, where the median weekly rent sits at $700, there was either no growth in the quarter or 1.4 per cent in Canberra. But for those cities, the annual increase was 4.5 per cent for Perth and 2.9 per cent in Canberra and Darwin.
The next priciest city, Brisbane, saw the largest rent jump in the past three months and a 6.3 per cent year-on-year rise. Hobart, after the quarter’s 1.7 per cent rise and the biggest annual jump nationally of 7.1 per cent, has set a new record median of $600 a week.
Melbourne, meanwhile, is $15 a week below its September 2024 record, after no growth in the last quarter and a 1.7 per cent drop on the year.
“Melbourne is the city definitely giving renters more bang for their buck and the simple reason is the amount of stock being approved and built,” PRD Real Estate chief economist Dr Diaswati Mardiasmo says.
“The last figures show Melbourne has 14,000 to 15,000 units approved, which is literally double Brisbane’s 7000 to 8000 on the drawing board and being built, even though Brisbane has a slightly higher rate of population growth than Melbourne.
“That’s keeping rents down in Melbourne, with the huge demand in Brisbane, and the high cost of building and freight from the nearest port, keeping them up there.”
Unit median rents remain the highest in Sydney at $750 a week, with no quarterly change and 7.1 per cent annual growth. The unit median is $650 in Brisbane at 3.2 per cent on the quarter and a staggering 8.3 per cent on the year, and $650 also in Perth after no quarterly growth and a 4.8 per cent annual rise. The unit median in Darwin is $598, rising 3 per cent over the past three months and a monstrous 8.6 per cent over the year.
In Melbourne, the median unit rent is $580, up 0.9 per cent in the quarter and 5.5 per cent for the year. In Canberra, it’s also $580 on 3.6 per cent growth in both the quarter and year; in Adelaide, it’s $525 after 1 per cent quarter growth and 7.1 per cent annually; and $480 in Hobart after a 1 per cent slide over the quarter with a 4.3 per cent rise on the year.
“Ultimately, it’s still a landlords’ market but it is becoming more fragmented,” Powell says.
“There are still low vacancy rates, although we’ve moved away from the record lows we have seen.
“We have a push-pull economy between rental dynamics and what renters can now pay. Although we’re seeing that reacceleration of both house and unit rental growth in Brisbane, it’s generally elsewhere more gentle, subdued growth, or stability.”
That’s a trend likely to continue for the rest of 2026, Mardiasmo predicts, depending on interest rate movements.
She believes investors are “unlikely to get spooked” – even with the worst-case scenario of a couple of cash rate rises this year.
“I think when the RBA [Reserve Bank of Australia] said that ‘rental inflation’ was down, a lot of renters thought that meant rents were going down, when they just meant that rental growth is slowing,” she says.
“But while rents are still at record highs, we’re now seeing that growth back at pre-COVID levels.
“Instead of rents going up by $100, $200 or $300 every lease time, we’re now seeing increases of $10, $20 or $30, which is what usually happened before all that COVID craziness kicked in.”
Many tenants are now breaking leases to relocate to the outskirts of capital cities or move to other cities entirely in search of more affordable rents, says Ben Pretty, chief executive of Leaso.
“Rents are incredibly high but stabilising while the cost of living is also hurting many people,” he says.
“We’re now seeing people re-evaluate high rent areas when they can work remotely elsewhere, so moving to find cheaper rents or going off-market into big geographical Facebook groups to look for them.”
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