At the end of 2024, CoreLogic (now Cotality) reported that Australians were paying a record share of their income to rent the median home.
Cotality’s latest quarterly rental report also noted that median rents have increased by 43% nationally over the past five years, forcing the typical tenant household to pay $10,350 extra per year on rent.
Source: Cotality
This week’s Q2 CPI inflation release from the Australian Bureau of Statistics (ABS) gave hope that the rental crisis is easing.
The ABS reported that annual rental inflation eased to 4.5% in Q2 2025, down from 5.5% in Q1. “The easing in annual rental price growth reflects stable vacancy rates and slowing growth in advertised rents across most capital cities”, the ABS stated.
As illustrated below by Justin Fabo from Antipodean Macro, rental inflation has been artificially suppressed by increases to the Commonwealth Rent Assistance (CRA), which was increased by 10% on 20 September 2024.
The reprieve may be short-lived, however, with Cotality’s July housing report noting that “rental vacancy rates [are] holding close to historic lows, tracking at 1.7% nationally in July”.
As a result, Cotality noted “some evidence of reaccelerating growth trends”.
“On a seasonally adjusted basis, national rents were up 1.1% over the three months ending July, up from a recent low of 0.5% through the September quarter last year”.
“The reacceleration in rental growth is clearly bad news for renters, where the median income household would already need around a third of their pre-tax income to pay rent”, said Tim Lawless, Cotality’s director of research.
“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”.
Cotality noted that the annual trend in rents has also trended higher, rising from 3.4% in May and June to 3.7% in July.
Source: Cotality
The tightening of the rental market and the reacceleration of asking rents may reflect the apparent rebound in net overseas migration.
The latest monthly data on permanent and long-term arrivals from the Australian Bureau of Statistics (ABS) suggested that net overseas migration has reaccelerated.
If so, Australian renters should brace for more pain.
