At the end of 2024, CoreLogic (now Cotality) estimated that Australians were paying a record percentage of their income to rent the median property.
According to Cotality’s most recent quarterly rental report, national median rents have risen by 43% over the last five years, causing the average tenant household to pay an additional $10,350 per year in rent.
Source: Cotality
Throughout 2024, Australia’s rental inflation eased amid the deceleration of net overseas migration from record levels.
However, a new report from CoreLogic economist Kaytlin Ezzy warns that rental growth has reaccelerated for the first time in 16 months, sparking concerns for tenants and overall inflation.
On a seasonally adjusted basis, Cotality reported that national rents were up 1.1% over the three months ending July, up from a recent low of 0.5% in the September quarter of 2024.
Ezzy said the trend bears watching, given the significant weighting rents have in the consumer price index (CPI) basket.
“The housing component makes up more than one-fifth of the CPI basket, with rents alone accounting for 6.6%”, she said.
In Cotality’s July housing market report, director of research Tim Lawless added:
“The reacceleration in rental growth is bad news for renters, where the median income household would already need around a third of their pre-tax income to pay rent”.
“Renting households have historically skewed to younger, lower-income cohorts, so no doubt the sting of high rents is having an even more acute impact on household budgets”.
The apparent resurgence in net overseas migration may have driven the reacceleration in rental growth.
The latest ABS net permanent and long-term arrivals data for May revealed a record 245,890 net arrivals over the first five months of the year:
Chart by Tarric Brooker
This apparent reacceleration in net overseas migration has been associated with a tightening of rental vacancy rates.
Cotality’s July housing report noted that “rental vacancy rates [are] holding close to historic lows, tracking at 1.7% nationally in July” with the tightening of vacancy rates illustrated below by Justin Fabo from Antipodean Macro:
The outlook for renters remains poor, with the Albanese government last week announcing that it has raised the planning level for international students by 25,000 to 295,000 for 2026.
The government also dumbed down the visa system by weakening English-language requirements, which will increase overall temporary migration into Australia.
As a result, Australia’s international student and temporary visa numbers—which are already the highest in the advanced world relative to our population—will very likely increase further, placing upward pressure on rents.
