Rental affordability across Australia has plummeted to a new low, but one state has emerged as a haven for renters.
The incredibly challenging situation facing renters has been laid bare in a new report examining the dire state of rental affordability across the country.
Rental affordability has plummeted to a new low in the six months to December 2024, according to the latest REA Group Rental Affordability Report, with households across the income spectrum able to afford the smallest share of advertised rentals since 2008, when records began.
The deterioration in affordability has been driven by the significant increase in rents over the past years, the report found, despite rental growth slowing in 2024 and rental availability improving in most capitals.
The rapid surge in rents has outpaced income growth, meaning the share of rentals that are affordable on a typical income has shrunk.
A median-income household can afford just 36% of rentals advertised on realestate.com.au while spending 25% of their pre-tax income or less.
Where renting is most affordable
While the analysis shows it’s getting even tougher to be a renter, the report revealed that renters in one state have it a little easier than the rest.
Victoria is the most affordable state for renters, even though affordability has deteriorated in recent years.
Victoria is the most affordable state for renters by far, according to the latest REA Group Rental Affordability Report. Picture: Getty
A median-income household could afford 54% of rentals advertised on realestate.com.au.
“Victoria stands out as the most affordable state to rent in by some margin,” said report author and REA Group executive manager of economics Angus Moore.
“This is a relatively recent development as Victoria was the second-least affordable state for renters as recently as 2016-17.”
“This change in relative affordability reflects that rents in Melbourne haven’t grown nearly as quickly as other parts of the country since 2020.”
It's now cheaper to rent in Melbourne than in Adelaide. Picture: realestate.com.au/sold
Melbourne’s median rent of $570 per week is $10 cheaper per week than Adelaide, despite the fact that typical incomes in Victoria are 24% higher.
But even though Victoria is the best state to be a renter, affordability has worsened in recent years and households can afford the smallest share of renters since 2011-12.
Where renting is least affordable
Rental affordability is most challenging in New South Wales, having deteriorated rapidly since the pandemic-era peak in 2020-21, the report found.
That’s largely due to Sydney being the most expensive rental market in the country, with its median rental price of $730 per week remaining $80 more expensive than the second-most expensive city, Perth.
New South Wales is the least affordable state for renters, due in large part to Sydney's high rents. Picture: Getty
Only about a quarter of rentals advertised on realestate.com.au were affordable for a median-income NSW household, the report found.
South Australia closely followed as the second-least affordable state for renters.
“Renters in South Australia are facing extremely strained rental affordability,” Mr Moore said.
“This represents a sharp change, as South Australia was the second-most affordable state in the years prior to the pandemic.”
Rental prices in Adelaide have jumped considerably in recent years, partly due to increased population flows from Sydney and Melbourne having an outsized effect on its smaller rental market, Mr Moore said.
“Relative to March 2020, rents in Adelaide have surged 55%, far outstripping growth in incomes,” Mr Moore said.
Tasmania, Western Australia and Queensland all became less affordable for renters, although the differences in rental affordability between the states are small.
Renting has become even harder for young people and low-income renters
Among younger households aged 15-34, the majority of which rent, affordability is particularly challenging, the report found.
Just 19% of rentals were affordable for a median-income 15-24-year-old household.
“The challenging state of affordability is also likely to delay the formation of these young households,” Mr Moore said.
“Because renting is so challenging for young households, many will instead choose to stay with their parents, or in larger households, for longer than they otherwise might.”
It's particularly challenging for young people to find an affordable rental property, with rents having grown most rapidly for the least expensive rentals. Picture: NCA NewsWire / Nicholas Eagar
Meanwhile, rents have risen fastest for more affordable homes, putting more pressure on renters with lower incomes.
“This is in no small part due to the pressures on rental markets in traditionally more affordable markets – smaller capitals and regional areas,” Mr Moore said.
“These markets have seen rapid rent growth since the onset of the pandemic as lifestyles changed and many took advantage of remote work arrangements to move out of more expensive cities.”
“A surprising result of this divergence is that Melbourne – which has not seen as strong growth, and where rental affordability is not as acute – now has a disproportionately high share of the country’s more affordable rentals.”
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