The high cost of choice: Why a six-figure income is the new reality for Canberra renters

An uncomfortable shift in Australia’s rental market means that desirable locations are now largely reserved for six-figure earners, according to new research.

The latest data from Domain on rental affordability reveals renters are set to face some of the toughest trade-offs in a decade.

“Rental affordability has deteriorated significantly since 2019, with a growing share of income now spent on rent in every capital city,” says Domain chief of research and economics Dr Nicola Powell. 

“Across the combined capitals, a two-person household earning average wages would spend 21.1 per cent of its income renting a typical home.”

In Canberra, it is closer to 20.7 per cent. This upward drift nationwide reflects one of the longest periods of sustained rental tightness in Australia’s history, Powell notes.

The required annual income to rent a typical home in Canberra without financial stress is $121,333 for houses and $100,533 for units, while the extra income needed to rent a house instead of a unit is up to $20,800.

Analysis shows the gap between the income needed to rent a house versus a unit varies across cities due to differences in housing supply, tenant profiles and income levels. 

“In Darwin, Canberra, Adelaide and Perth, units tend to cater to lower-income renters, while houses are typically sought by higher-income families seeking more space,” Powell says. “This demand split contributes to a larger affordability gap between houses and units.” 

The data reveals the most expensive suburbs in which to rent in the ACT are in the Inner South, such as Red Hill, Deakin, Campbell, Kingston and Yarralumla. The most affordable suburbs to rent in include Belconnen, Scullin, Page, Gordon and Phillip.

In Red Hill, for example, the average weekly rent is $1100, which requires an annual income of more than $190,000. Belconnen, on the other hand, is nearly half that at $585 per week, which would require an annual income of about $101,000.

As of December last year, the vacancy rate in the ACT was 1.5 per cent, the highest monthly figure in a year, but the lowest December reading since 2021.