Tenants are facing rising rental prices across Australia’s capital cities once again, fuelled by population growth and shortfalls in rental home supply.
The latest realestate.com.au Market Insight has revealed the median weekly advertised rent across the capital cities increased 4.6% to $680 per week over the three months to March, jumping $30 per week compared to the December quarter.
The quarterly jump follows a period of stability for capital city rents after they sat at $650 per week throughout 2025, although some cities did see increases.
Rents grew across all capital cities, with Perth, Darwin and Hobart recording the strongest growth of between 7-8% during the past year.
Melbourne and Canberra posted the slowest growth compared to a year earlier but were still up between 2-3%.
Rents in regional areas grew faster than the capital cities, with combined house and unit rents surging 9.1% in a year.
Source: realestate.com.au Market Insight
REA Group economic analyst Luc Redman said strong population growth and supply shortages were driving rental prices higher.
“For most capital cities, it’s a combination of strong population growth combined with a shortage of rental housing supply, be that a shortage of supply already or a dwindling of the rental stock” he said.
“Demand for rental stock has also moderated in some cities such as Melbourne, where rental price growth has been slower than other cities.”
Melbourne is the equal cheapest capital city to rent in, alongside Hobart, with the median weekly house rent rising 0.9% year-on-year to $580, while units overtook house rents, jumping 5.3% to $600.
Rental prices have increased as competition for rental homes remains challenging. Picture: Liam Kidston
Antony Bucello, buyer’s advocate and National Property Buyers director, said rental yields remained varied across Melbourne.
“Inner-city apartments are typically delivering yields around 5%, while suburban family homes are closer to 3.5%,” he said.
“Rental vacancy rates remain relatively stable and currently sit at around 2.4%, according to the REIV.”
Sydney remains the most expensive city to rent in, with a median dwelling price of $780 per week, up 4% year-on-year.
In Sydney, the median weekly house rent rose 2.6% year-on-year to $800, while units increased 4.2% to $750.
Buyer’s advocate and Propertybuyer founder Rich Harvey said Sydney’s rental market continued to be tight.
“Limited rental stock is sustaining competition among tenants and supporting investor interest in the market,” he said.
In Sydney, gross rental yields are about 3% and vacancy rates remain low at 1.5%, Mr Harvey said.
The rise in rental prices is a hit to rental affordability around the country, with Aussie renters already facing the worst levels of rental affordability in two decades, according to the latest realestate.com.au Rental Affordability report.
It revealed that during the six months to December 2025, households across the income distribution could afford to rent the smallest share of advertised rentals since at least 2008.
Mr Redman said building new homes to increase the supply of rental housing supply was the best way to ease rental affordability pressures.
“Increasing supply is the number one way to improve rental affordability,” he said.
“We need more supply in well-located, high amenity areas where people want to live, near things like public transport, health, education and economic opportunities.”
Looking ahead, Mr Redman said a more modest pace of rent growth was expected for the rest of this year as constrained household budgets keep a lid on what they can afford to pay.
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