Rents have climbed by 4.3% in the 12 months until the third quarter, with wages increasing by 3.4% over the same period
Published Wed, Feb 11, 2026 · 08:14 PM
[SYDNEY] Australia’s rental accommodation affordability has plunged to a record low as surging prices outpace wage growth – fuelling inflationary pressures that forced the Reserve Bank of Australia (RBA) to raise its key interest rate last week.
Households renting spent a record-high average of 33.4 per cent of their pre-tax income to keep a roof over their head in the third quarter of 2025 – the most recent data available – property consultancy Cotality said on Wednesday (Feb 11).
That is higher than a 10-year average of 29.2 per cent.
Rents climbed by 4.3 per cent in the 12 months until the third quarter, while wages rose by 3.4 per cent over the same period.
Tim Lawless, research director at Cotality, said: “With vacancy rates still around record lows in many markets, and new housing completions running below what is needed to meet population growth, it is hard to see rents materially easing in the near term.”
Affordability will further deteriorate unless “wage growth accelerates meaningfully, or a step change in rental supply” occurs.
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The RBA became the first monetary authority in the world to hike rates in 2026, in an effort to tackle stubbornly high inflation that has been driven in part by an overheating property market.
Economists and financial markets expect another hike in the months ahead that would take the cash rate to 4.1 per cent – and mostly reverse a short and shallow easing cycle of 75 basis points in 2025.
RBA chief Michele Bullock told a parliamentary panel on Friday that the rate-setting board will be honing in on “the extent to which the stronger inflation we have observed is persistent or temporary – that is, the extent to which the economy is capacity constrained”.
Other key data from Cotality showed that Western Australia recorded the steepest increases, with rents soaring by 66 per cent over the past five years – higher than a 18.5 per cent rise in wages.
It also revealed that the Australian Capital Territory was the only market where rent and wage outcomes had been broadly aligned over the period – with rents up by 18.5 per cent and wages 17.8 per cent higher. BLOOMBERG
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