Rental prices across Australia have stopped rising so quickly, and some rents are dropping

Australia’s crippling era of explosive rental growth is finally winding down, with new data revealing rent prices are mostly flatlining across the capital cities and even edging downwards in others.

The latest quarterly Domain Rent Report, released on Thursday, showed that quarterly price growth across the combined capital cities had flatlined to 0 per cent over the past three months.

Domain’s chief of research and economics, Dr Nicola Powell, says it’s been a swift pull of the handbrake.

“After enduring the steepest and longest rental surge in history, all capital cities have passed their peak in growth rates and are now decelerating rapidly, with some cities already in decline,” she says.

“For the first time in nine months, quarterly rental growth for both houses and units has stalled across the combined capitals, marking the weakest September quarter since 2019 for houses and since 2020 for units.

“This has slowed annual gains to an almost three-year low across the combined capitals, with most cities at multi-year lows.”

Annually, house rents are still up 8.3 per cent across the capitals, while units have grown by 5 per cent. 

While the worst of Australia’s white-hot rental market rises may be over, it’s likely to be cold comfort to the tenants locked into paying hundreds of dollars more per week than they were just a few short years ago.

For example, in September 2020, the median weekly rent for a house in Sydney was $540 to $235 cheaper than today’s prices. In Brisbane, a house’s median rent was $410 – a $215 price difference. In Perth, it was $390 to $270 less than it is now. 

“It’s very clear that the brakes are on,” says Powell. “Last quarter, we did see that slowdown, but what we’ve got now is that different cities are now in decline.

“It’s pretty much the weakest outcome that we’ve seen since those early pandemic times across many of our capital cities. Something I find really astonishing is that we have these slowing conditions with some cities in decline when we still have a landlord’s market across every single capital city.

“We have seen an improvement overall in vacancy rate, but we have to remember that choice is still quite limited across many of our capital cities.”

A balanced market has vacancy rates between 2 and 3 per cent – anything below that is considered a landlord’s market because there is not enough supply to keep up with demand.

The only capital city that is close to a balanced market is Canberra, with a 1.6 per cent vacancy rate.

It’s going to take time to reach a balanced rental market more broadly across the nation, says Powell.

“Supply takes time. However, one of the fundamental things we do know is that investor activities are rising, and they are consistently rising, and that will provide much-needed supply and choices that tenants have been wanting and needing for years now.

“We have technically got a landlord’s market across every city, but we’ve got a slowing rate of growth, and some cities either stabilised or declined, which tells us a lot about affordability. It tells us a lot about the financial pressure and strains that tenants are under.”

The slowdown in the market comes with the recent demographic shifts happening in the rental market, Powell says. 

“It’s much easier to get a housemate to cut costs or share the rent burden. Or going into a house share, or going to go in live with Nan and Pop. Or move back within the family home [to lower rental financial pressures].”

Powell suggests renters “get to know your area” because while a capital city hasn’t seen a decline in rental prices as a whole, at a more micro level, there could be suburbs with stabilising or falling rent prices. 

“It is about using data indexes like the [Domain Rent Report] to help benchmark what’s actually going on in your particular region,” she says.

Sydney rental prices

$1350 per week

38 YORK STREET, Sydney NSW 2000

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Sydney is the most expensive city in Australia for renting a unit or a house.

The median asking rent for a house is $775 (up $15 in the quarter), and the median weekly rent for a unit is $720 (same as the previous quarter).

“Sydney’s vacancy rate has steadily risen annually, reaching 1.1 per cent in September – the highest level for this month since 2022,” says Powell.

“This trend underscores a gradual easing of rental conditions as the city experiences an improved vacancy rate alongside a slowdown in the pace of rental growth.”

Melbourne rental prices

$550 per week

261 Centre Road, Bentleigh VIC 3204

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Melbourne house and unit prices remained steady over the quarter, with unit rents being stable for two consecutive quarters for the first time in five years. The median asking price for a house continues to be $580, and for units, it’s $550

“Melbourne’s vacancy rate has steadily increased to 1.3 per cent in September, the highest level since December 2022. This trend underscores a gradual easing of rental conditions, as the city experiences an improved vacancy rate alongside a slowdown in the pace of rental growth.”

Both unit and house rents have significantly eased in terms of annual gains only rising by 5.8 per cent and 5.5 per cent respectively. Last year, the annual gains were 22.4 per cent and 17 per cent, respectively.

Brisbane rental prices

$1050 per week

5 Fifteenth Ave, Brighton QLD 4017

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Brisbane house and unit rents have decreased for the first time since 2020, with house rents now at $625 (down $5 from the previous quarter) and units at $590 (down $10 from the previous quarter).

“This decline bucks the trend observed across the combined capital cities, where rents remained steady.”

Annual growth eased across units (7.3 per cent) and houses (5.9 per cent), the slowest in the past three years.

“Brisbane’s vacancy rate has steadily risen annually, reaching 0.9 per cent in September,” says Powell. “It is unusual to see rents decline when the vacancy rate remains firmly in favour of landlords, which highlights the affordability pressures affecting tenants.” 

Adelaide rental prices

$650 pw

518/152-160 Grote Street, Adelaide SA 5000

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Adelaide’s rent growth has risen for the 17th consecutive quarter, pushing the median house rent to $600 weekly.

“Despite the persistence, the pace is slowing, with the 0.8 per cent (or $5) quarterly gain remaining at its slowest in just over four years and it remains the weakest outcome for a September quarter in five years,” says Powell. “In turn, annual gains have eased to their lowest in 3.5 years, rising by 9.1 per cent.”

Units increased to $495 (up $10 from the previous quarter), but the growth rate has decelerated, and it is the weakest September quarter since 2021.

Perth rental prices

$1,600

49/42 Terrace Road, East Perth WA 6004

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After a short-lived quarter of rental stability, rents across Perth have increased for houses and units.

The median asking rent for a house is $660 (up $10 in the quarter), and the median weekly rent for a unit is $570 (up $20 in the quarter).

“Perth has experienced one of the steepest quarterly increases and highest annual gains of the capital cities, positioning it as the nation’s third most expensive city in which to rent a unit for the first time in 9.5 years,” says Powell.

Canberra rental prices

$730 per week

43 Katoomba Street, Harrison ACT 2914

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Canberra house and unit rents have decreased, with house rents now at $680 (down $5 from the previous quarter) and units at $550 (down $10 from the previous quarter).

“This is the first time in nine years that unit rents have experienced two back-to-back quarters of decline,” says Powell. 

For the first time in history, Canberra is now the third-cheapest city in which to rent a unit. It also has a vacancy rate of 1.6 per cent – the highest across all capital cities, making the market more favourable to tenants. 

Darwin rental prices

$620.00 Per Week

50/26 Marina Boulevard, Cullen Bay NT 0820

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Darwin house and unit rents have increased to new price records. The median rent for a house is $680 (up $20 in the quarter), and the median weekly rent for a unit is $550 (up $20 in the quarter).

“[The house] quarterly growth rate is at its highest since March 2023, marking the strongest September quarter in four years,” says Powell. “And Darwin unit rents are back on the rise, fully reversing the decline from the previous quarter. ”

Hobart rental prices

$650.00 per week - Fully Furnished

9/84 Upper Fitzroy Crescent, South Hobart TAS 7004

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Hobart rents are rising again for both houses and units. 

The median asking rent for a house is $550 (up $10 in the quarter), and the median weekly rent for a unit is $460 (up $5 in the quarter).

Despite the price growth, Hobart continues to be the most affordable capital city in which to rent a house or a unit.