There’s no doubt that renters have had it tough in Australia in the years since the COVID-19 pandemic. Cotality’s national rental index has the costs 42.9% higher in the December Quarter of 2025 than at the same stage five years prior. That adds up to an increase of $204 per week to the national median rental value, which sits at $679 as of the end of 2025.
That doesn’t mean there aren’t still parts of the country and our capital cities that are affordable for renters, of course. There are three big questions to answer here:
- How much does rent cost across Australia?
- How affordable is rent?
- What might happen to rental prices in 2026?
Where is the cheapest place to rent in Australia?
First, let’s have a look at the raw dollars. Rental values, of course, vary significantly depending on not just your state or territory, but also the suburb or even street you live on in your city or town. However, if we zoom out to Australia’s capital cities, the simplest measure for determining the cheapest place to rent is by looking at each location’s median rent.
From there, we can see that Hobart has the lowest median rent of any capital city in Australia at $601 per week, according to Cotality’s Quarterly Rental Review for the December Quarter of 2025. Sydney is, unsurprisingly, the most expensive at $817 per week.
It’s also worth looking at the locations where rental growth has been at its highest across the last 12 months. You can see from the figures that Darwin has actually experienced the sharpest increase in rental costs over that period at 8.2%, followed by Hobart (7.2%). Melbourne saw the least growth across the 12 months, but did still go up by 2.9%.
The cheapest and most expensive suburbs to rent
The cheapest suburb in which to rent a house in any capital city is Melton, an area in the outer west of Melbourne. The median housing rent in the December Quarter of 2025 was $418, followed closely by Melton South ($426). The two suburbs are also the cheapest places to rent units, with Melton South ($376) beating out Melton ($386) in that department.
There are no surprises that Sydney is well represented among the most expensive suburbs to rent a house, with its top 30 suburbs beating out any suburbs in any other capital city. Vaucluse is top of the pops, with a staggering median rent of $2,310 per week. Three other suburbs crossed the $2,000 median threshold: Rose Bay ($2,155), Dover Heights ($2,101) and Mosman ($2,037).
You can see in the table below what the cheapest and most expensive suburbs are in each capital city, per Cotality:
Cheapest suburbs to rent in Australia: Q4 2025
Most expensive suburbs to rent in Australia: Q4 2025
Housing affordability in Australia: 2026
“Cheapest” and “most affordable” are two different things, even though they sound similar. Affordability takes into account the income of renters, rather than just looking at the cost of the property.
As an example, let’s consider two properties: one is listed for rent at $500 in City A, while the other is listed for $600 in City B. Although the rent for the home in City B is clearly higher, the average weekly income in that city is $1,500, compared to $1,200 in City A. That means that rent makes up a smaller portion of the average wage in City B (40%) than it does in City A (42%), making it slightly more affordable in this instance.
SGS Economics releases its Rental Affordability Index (RAI) each year, which measures the unaffordability of rental properties based on the share of income spent on rent. The following table shows how SGS Economics grades rental unaffordability:
| RAI score | Share of income spent on rent | Relative unaffordability |
|---|---|---|
| >200 | 15% or less | Very affordable |
| 151-200 | 15-20% | Affordable |
| 121-150 | 20-25% | Acceptable |
| 101-120 | 25-30% | Moderately unaffordable |
| 81-100 | 30-38% | Unaffordable |
| 61-80 | 38-60% | Severely unaffordable |
| 41-60 | 60-75% | Extremely unaffordable |
| <40 | 75% or more | Critically unaffordable |
Where is the most affordable place to rent in Australia?
As of June 2025, the most affordable capital city in which to rent in Australia is Canberra and the ACT, according to SGS Economics. Just 23% of the average household income goes towards rent in the nation’s capital.
It’s the only capital city where rental prices are graded as “Acceptable”, with all others being either “Unaffordable” or “Moderately unaffordable”. Perth was the least affordable, with rent making up 32% of the average household income.
If more than 30% of your income goes towards your rent, it's typically deemed unaffordable. This can become a challenge when applying for rental properties, as real estate agencies may automatically reject you if your rent would exceed that mark.
| Location | RAI score | Rent as a share of income | Relative unaffordability |
|---|---|---|---|
| ACT | 133 | 23% | Acceptable |
| Greater Melbourne | 118 | 25% | Moderately unaffordable |
| Greater Hobart | 106 | 28% | Moderately unaffordable |
| Greater Brisbane | 103 | 29% | Moderately unaffordable |
| Greater Adelaide | 101 | 30% | Moderately unaffordable |
| Greater Sydney | 100 | 30% | Unaffordable |
| Greater Perth | 94 | 32% | Unaffordable |
Of course, this is all general, applied across the whole population in these areas. We’ve broken down how much different groups are paying for rent as a share of their income across the capital cities and regions:
Where to next? How the rental market might look in 2026
With the news that the Reserve Bank of Australia (RBA) would bump the cash rate back up by 25 basis points to 3.85% in February, experts are predicting that the rate of property value growth will slow in 2026.
We saw significant growth in property values in 2025, thanks in no small part to the RBA’s three cuts, dropping from 4.35% to 3.60%. However, with inflation continuing to rise, many are forecasting further increases to the cash rate, which will further hamper growth.
Whether that has any great impact on the rental market remains to be seen, though. According to Associate Professor Evgenia Dechter from UNSW Business School, the pressure renters are dealing with right now may persist independent of rate movements.
“Rental prices are primarily driven by supply and demand in the rental market”, said A/Prof. Dechter.
“But when financing costs are high, and vacancy rates are low, landlords may have more opportunities to pass through the financial costs to renters.”
In terms of trends seen across the back part of 2025, Hobart saw by far the greatest quarterly change in rental rates in Q4 (2.5%), with Perth being the next-highest at 1.6%.
The biggest mover for the year, Darwin, saw the least growth in Q4 (0.3%) and has the highest vacancy rate of 2.6%, potentially pointing to an easing in rental conditions.