Australian rents soar to record highs as housing crisis bites
The humble share house is back on the table as renters wrestle with rising rental costs
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National median rents for Australians have reached record highs, CoreLogic data shows.
The median rent rose to $601 per week in December, or $31,252 a year, and increase of more than $160 since August 2020.
Average rent growths were 9.1 percent over the past three calendar years compared with 2 percent in the 2010s. Sydney recorded the highest median rent at $745 per week, while Hobart was the lowest at $535. Hobart recorded a -3.5 percent drop in median rents. Along with Canberra, which fell -1.9 percent, they were the only markets to experience a decline.
Author of the Rental Market Update and head of research Australia at CoreLogic, Eliza Owen, said factors such as an upswing in migration numbers since 2022 and the overall decline in the average size of households were contributing factors to the rise in prices.
It noted that the reduction in available social housing had placed further pressure on the private rental market, especially at the lower end.
While the figures are alarming to renters, the report noted that the rate of growth has slowed compared with recent years. Last year, rent values rose 8.3 percent, down from 9.6 percent in the year to September 2022. The contrast is even greater in regional areas where rents increased by 4.3 percent last year compared with 13.4 percent in the year to August 2021.
“The easing in rent growth is good news with regard to inflation, but there was a slight pick-up in annual growth once again in the final quarter of 2023,” Ms Owen said in the report. “This ‘re-acceleration’ in rents was most consistent across the capital city house markets, but was also evident in regional rent markets.”
However, she said cost of living pressures were causing some renters to re-think household arrangements.
“As noted in previous quarters, part of the explanation for an uptick in house rent growth may be in part due to households re-grouping into share houses,” Ms Owen said. “Additionally, the premium of house rents over units has narrowed in the past two years, from $63 per week at the median level to $38.
“This ‘catch up’ in unit rents could be making them less appealing, diverting tenants back to houses.”
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The typically busy spring season for the housing market was a dud, and the summer isn’t looking much brighter.
Housing services companies like Zillow Group and Rocket RKT +3.78% were loud and clear last week on earnings calls: Rocket CEO Varun Krishna called the quarter through June “one of the toughest spring housing markets in years.”
Jeremy Hofmann, Zillow’s chief financial officer, said on a conference call that the company predicted earlier this year that the market for mortgages would be flat. “We actually now think it’s going to be down low-to-mid-single digits,” he said.
The rest of 2026 will remain challenging for mortgage origination volume, says KBW analyst Bose George. The question now is what happens in 2027. “If mortgage rates remain [around] 6.75%, I think that’s going to be challenging even for next year,” he says.
But what’s bad news for mortgage companies could be a positive for bargain hunters. Buyers can expect prices to grow more slowly—or mildly decline—with less competition as long as mortgage rates remain unpredictable.
Mortgage rates at the beginning of the year were solidly below year-ago levels, notes Zillow senior economist Kara Ng. But they surpassed last year’s levels recently, she adds, referencing Freddie Mac’s weekly survey of 30-year fixed mortgage rates. Last week’s reading, at 6.69%, was higher than year-ago levels for the first time in 2026.
“From the affordability point of view, it’s going to get more challenging in the second half of the year,” she says. “And when affordability gets more challenging, that impacts sales and home price appreciation.”
Mortgage application data tracked by the Mortgage Bankers Association has cooled since the beginning of the year. The trade group expects that the number of mortgage originations in the remaining two quarters will lag behind last year’s levels, after exceeding 2025 levels in the first half.
Rocket’s early-stage data—which the company told Barron’s it derives from its brokerage Redfin, demand for its mortgage products, and signs in its servicing portfolio that a homeowner is preparing to refinance or move—“leads us to expect the third quarter mortgage market to be smaller than the second,” Chief Financial Officer Brian Brown, said on the company’s call. He added that such an occurrence is “something the industry has not seen since 2022.”
Prices will be about flat nationally, Ng says. Zillow’s most recent forecast, which shows how values are expected to change in the year ending June 2027, show them dropping in roughly half of the 100 largest U.S. metros for which data is available.
Buyers aren’t rushing in at a time when mortgage costs are rising and unpredictable. But those with the right combination of patience and cash could stand to benefit. “If you are financially qualified to buy a starter home, you are facing less competition and you’re more likely to get a price cut,” Ng says.
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