Australian landlords are being advised to raise rents now to recoup rising holding costs, with tenants facing a $10,000-a-year hike by 2035.
Aussie landlords could be in for a $10,000 a year windfall by 2035 amid projections of a 10-year rental hike cycle that would have huge ramifications for tenants.
But a battle is looming as the nation’s pre-eminent property investor lobby group calls for landlords to push rents higher where they can to combat governments taxing them more heavily and a nationwide home building scheme aims to put the brakes on rents.
SQM Research founder Louis Christopher is forecasting a 2-4 per cent increase in rents across Australia’s capitals in the next year.
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Mr Christopher said Melbourne might be lower, forecasting a 1-3 per cent increase for the Victorian capital as the state’s government had done more for tenants than other capitals at this point.
Other cities could be much higher, with Brisbane forecast to hit 3-5 per cent uptick, and Hobart tipped for 6-10 per cent.
But the figures are not likely to hold at that level, with SQM anticipating 180,000 new dwellings to be completed nationwide in 2026 – which should do a better job of accommodating population growth than recent years.
Nationwide, the federal government is pushing to build 1.2 million new homes in a bid to address the nation’s housing affordability crisis — though fell well short of the 240,000 needed to be built in the first year of the five-year timeline set for the ambitious target.
Aussie tenants could be paying $10,000 more a year by the end of the next 10 years if historic norms continue.
Despite this, Mr Chrisopher noted most larger Australian rental markets have tracked fairly closely with the Consumer Price Index — near to 2.6 per cent, in line with the Reserve Bank’s target range for inflation.
“It should get back to pre-Covid levels, and that will be reality in time,” Mr Christopher said.
Projected forward the trend would lead to the nation’s $650 a week typical rent for a house ballooning out to $830 a week, dragging the annual cost for renters from $33,800 to almost $44,300.
Units don’t provide much relief, with the typical one today costing its resident $630 a week and likely to end the decade costing tenants $10,166 more a year than it does today.
In Sydney, leasing a house would cost $12,909 more a year and a unit an extra $12,102 over 12 months.
FIND OUT MORE ABOUT WHAT SYDNEY RENTERS CAN EXPECT
Brisbane tenants will be paying between $10,250 and $10,500 more for houses and units in 2035 than they are today, while Perth residents can also expect a five figure increase.
WHAT BRISBANE CAN EXPECT FROM RENTAL RISES
Melbourne would come out slightly lower with increases from $9250 to $9500 for both houses and units.
MELBOURNE’S DECADE OF RENTAL WARFARE REVEALED
Adelaide and Hobart unit renters might be in the best position in the country, with increases of just $8390 and $7906 on the cards respectively.
SQM Research director Louis Christopher has suggested renters with the ability to buy a home will be better off doing so than waiting for a decade of rent rises.
But both cities’ house rental markets will be more challenging, with a $9359 uptick likely on typical trends for Hobart, and a 9843 for Adelaide.
WHAT RENTAL INCREASES COULD MEAN FOR ADELAIDE
At the local level, the number of suburbs where the cost of renting a home costs $1000 a week is set to almost triple from 418 nationwide today, to a whopping 1193 by 2035.
While increased building should help stop rents increasing much more than this, Mr Christopher still advised tenants would be better off buying a home if they could afford it.
“If you have the opportunity to get in as a first-home buyer you should seriously look at it,” Mr Christopher said.
“Yes the market is going to pick up in the next year, but I think the way it’s gone for tenant’s who have turned into first-home buyers than has been better over those who remained as tenants, and I don’t see that changing any time soon.”
Property Investors Council of Australia chair Ben Kingsley said they were advising members and all landlords across the country to pursue rent rises well above CPI.
“Where conditions are such that vacancy rates are low, we are encouraging our PICA members and all landlords to increase their rents by 4-5 per cent, while the land market conditions can accommodate it,” Mr Kingsley said.
“To get their investment back on an even keel. And if governments continue to increase taxes and increase the costs, we will go even higher to recommend 5-6 per cent.
“And we think that’s a very reasonable response to get a return on investment that we are not getting at the moment.”
What your rent could be doing by 2035
$300 a week (2025) — $393 a week (2035)
$400 a week (2025) — $524 a week (2035)
$500 a week (2025) — $655 a week (2035)
Melbourne, Hobart median house: $580 a week (2025) — $760 a week (2035)
$600 a week (2025) — $786 a week (2035)
Adelaide median house: $610 a week (2025) — $799 a week (2035)
Brisbane median house: $650 a week (2025) — $852 a week (2035)
$700 a week (2025) — $917 a week (2035)
Sydney median house: $800 a week (2025) — $1048 a week (2035)
$900 a week (2025) — $1179 a week (2035)
$1000 a week (2025) — $1310 a week (2035)
$1200 a week (2025) — $1638 a week (2035)
$1500 a week (2025) — $1965 a week (2035)
$2000 a week (2025) — $2621 a week (2035)
$3500 a week (2025) — $4586 a week (2035)
Data reflects expected increase in rents if they continue to track historic trends in line with the 20-year average Consumer Price Index prior to the pandemic.
PICA’s 2025 members survey attracted about 900 responses this year, with 65 per cent noting they had been able to pass on less than 10 per cent of the added costs they had faced in the past year.
Not including interest, almost 270 indicated their costs had increased 11-20 per cent, while 160 encountered a 21-40 per cent increase in their costs.
While increases would be hard to bear for tenants, Mr Kingsley warned over time if rents failed to keep up with costs for landlords and yields dropped too low a growing share would choose to sell and put their money into more secure means of growing their wealth.
“If the yield drops so low and you aren’t getting a capital growth return, then you will move on from that asset,” Mr Kingsley said.
“It needs to be a valuable enough and attractive enough asset for you to keep money there.”
The result could be a gradual reduction in people willing to invest in property and “it will starve the market of supply”.
However he said that if government plans to boost the nation’s supply of homes did occur at levels to improve or even pause housing affordability issues, investors would struggle to raise rents.
“At the end of the day, prices will still be set by demand and supply – so if there’s a strong availability of rental accommodation, you will be hard pressed to put rents up, because the tenants will move on to cheaper rental properties,” Mr Kingsley said.
PICA chair Ben Kingsley is urging landlords to seek higher rents while they can.
With mum and dad investor’s still accounting for the majority of Australia’s rental homes, limiting their profitability to improve affordability would likely require governments at state and federal levels to tweak tax settings to keep investing attractive enough for it to continue.
The alternative was to let the free market determine rents, which would likely lead to increased housing density for renters as well as increased supply in the areas with the highest demand.
But Mr Kingsley said there were already alarm bells in two important rental markets from an investors perspective.
In the ACT he said costs, particularly land tax, for investors were so high “it’s just not worth investing in that territory”.
“It’s simply wasting money,” Mr Kingsley said.
It is also the only state in Australia that currently has a rental cap in place, barring landlords from increasing rents more than 110 per cent of CPI unless they can justify a bigger increase.
He said Victoria was also concerning, with government data showing consecutive decreases in the number of rental bonds active for the past 18 months after years of increasingly tenant-friendly legislation and regulation, as well as increased land tax costs.
Many Australian landlords are facing rising costs to hang onto homes with tenants in them, meaning both sides are grappling with price hikes.
However the flip side was also true, and states with lower regulation and where rents had surged, with “investment rolling into Western Australia and into Queensland”.
Socialist housing advocate and the man behind shitrentals.org Jordan van den Lamb said while tenant households were already struggling to survive, with many choosing between rent and food or medicine, he feared increases “will be worse than those predictions”.
“I think it’s absolutely possible we will see this happen, though I’m hoping the government will come to its senses — though there’s not currently any indication of that,” Mr van den Lamb said.
He added that while he feared sufficient action would not be taken to stop the rental rises of this magnitude, he believed the Australian government was reaching the point where it “has to respond and will respond”.
“We are seeing some governments respond to some of the most outrageous examples of slum lords,” Mr van den Lamb said.
“But you can see the household size for people who don’t own their home is increasing, so we are getting cramping of living spaces for renters as people have to rely on living with other people to be able to afford the place they rent.”
Rental advocate and social media personality Jordan van den Lamb fears historic rental increases will fall well short of reality for tenants. Picture: Matt Hrkac.
Mr van den Lamb added that with rent hikes now on the radar of the middle class as well as lower income households, particularly for those with children entering the rental market, it was likely rental costs would become increasingly high profile in the years ahead.
Scenarios like the Canberra approach of a rent cap had likely had some impact, however he warned an unintended result was that many landlords were now using that as a target and trying to increase rents by 110 per cent as a default.
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