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Rental Affordability Index 2025: Signs of stabilisation, but pressures remain high

Posted November 21, 2025

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SGS Economics and Planning RAI2025 Banner

Australia’s rental affordability has finally stabilised in parts of the country after years of steep decline. It’s the first hint of relief for many renters, but pressures remain high, especially for people on low and moderate incomes.

The 11th annual Rental Affordability Index, released today by SGS Economics and Planning, National Shelter and Housing All Australians, compares rents and incomes across the country to show where households face the greatest stress.

This year’s results show an improvement in the ACT (up 4%) along with stabilisation in Sydney, Melbourne, and Adelaide. However, affordability worsened in Perth (down 4%) and Brisbane (down 2%). Regional areas (excluding South Australia) have also become less affordable, many reaching the lowest point recorded by the Index.

Renters have hit their limit

SGS Principal and Partner, and lead author of the report, Ellen Witte, said the stabilisation in some cities reflects both easing supply constraints and the growing inability of renters to absorb further increases.

We have finally seen affordability stabilise in many places after rapid declines to record low levels since 2021.
The stabilisation may have less to do with relief and more to do with renters reaching their limit and being unable to pay more, combined with some easing of housing supply constraints. The exception is Perth and regional Western Australia, where rents continue to outpace wage growth.
— Ellen Witte

In the least affordable parts of the country, including Perth, Sydney, regional Queensland and regional New South Wales, even average earners are pushed into rental stress, spending more than 30% of their income to keep a roof over their head.

For a full-time hospitality worker, the outlook is particularly dire. Rents are out of reach in most capitals and rest-of-state areas.

Rental affordability is now a productivity issue

Poor rental affordability in our cities and regions is no longer viewed solely as a housing issue. It is now widely recognised as an economic issue, with key workers across Australia priced out of living close to their jobs and the community services they keep running being put under strain.

Robert Pradolin, Founder and Executive Director of Housing All Australians, said:

Housing that people can afford is critical economic infrastructure, and without it, our national prosperity and productivity are being held back.
— Robert Pradolin

Perth remains Australia’s most unaffordable capital

Perth remains the least affordable capital for renters, and regional Western Australia has suffered the sharpest annual decline of any region in the country.

The median rent in Perth now takes up 32% of an average household’s income, up from 21% in 2020, and now above Sydney (30%).

In regional Western Australia, affordability has fallen to its lowest point in more than a decade, following another 5% drop this year.

Ellen Witte said:

Perth’s rental market has shifted from steady to spiralling. In the 3 years before COVID, median rents rose by just 1% a year, but over the 3 years since, they’ve surged by around 14% a year.
— Ellen Witte

GREATER PERTH 2019 (LEFT), GREATER PERTH 2025 (RIGHT)

SGS Economics and Planning RAI PERTH 2019 25

Source: SGS Economics and Planning, 2025

Sydney shows early signs of easing, but remains deeply unaffordable

Sydney’s rental affordability has stabilised after years of deterioration, although conditions in the West and South West continue to decline.

The average renting household in Sydney now spends exactly 30% of its income on rent, the commonly accepted threshold for housing stress.

John Engler, CEO of Shelter NSW, said:

Sydney remains one of Australia’s least affordable rental markets, though there are early signs of stabilisation and perhaps some hope after years of deterioration. To maintain this momentum, we need to build on the delivery of hundreds of homes under the new Housing Australia Future Fund. Thousands more are in the pipeline, and these will take pressure off the private rental market. But our scale of ambition must not weaken. Housing Australia’s most pressing social and economic challenge.
— John Engeler

Even full-time workers face severe rental stress. A full-time hospitality worker would need to spend 42% of their income on rent, while a single full-time working parent spends 33%.

For people receiving income support, the situation is extreme. A single person on JobSeeker would need to allocate 131% of their income toward rent in Sydney, making stable housing unattainable without significant assistance.

GREATER SYDNEY 2015 (LEFT), GREATER SYDNEY 2025 (RIGHT)

SGS Economics and Planning RAI Sydney 2019 25 2

Source: SGS Economics and Planning, 2025

Melbourne is steady after sharp declines, but low-income renters are under pressure

Melbourne’s rental affordability has stabilised after a 22% decline between 2021 and 2024. The city’s median rent of $570 now consumes 25% of the median renting household’s income of $116,640, up from 23% in 2019.

The Index shows that low-income households continue to face the most pressure, with people on JobSeeker, single part-time workers receiving parenting benefits, and single pensioners all experiencing extremely unaffordable rents.

Before 2020, renters could still find affordable homes within 5-10 km of the CBD in suburbs such as Footscray, North Melbourne, Parkville, Carlton and Hawthorn. The affordable corridor that once ran from Footscray to Meadow Heights has now almost completely vanished.

GREATER MELBOURNE 2015 (LEFT), GREATER MELBOURNE 2025 (RIGHT)

SGS Economics and Planning RAI MELBOURNE 2019 25

Source: SGS Economics and Planning, 2025

Other capitals show mixed signs of relief

Across the ACT, Queensland, South Australia and Tasmania, the picture is mixed.

In Canberra, rental affordability has improved over the past year, rising 4%. Relatively high average incomes and rents, which have remained stable over recent years, have made the city Australia’s most affordable capital, with median rents of $600 taking up 23% of an average renting household’s income. However, the average hides the ongoing crisis for people on low incomes, including minimum wage workers, students and single parents, who still face unaffordable rents.

In Brisbane, years of rapid decline have eased slightly, but affordability remains at a record low. The Index shows a further 2% fall in the past 12 months, following a 24% drop since 2020. A median rent of $643 now consumes 29% of an average rental household income, up from 22% five years ago, putting even moderate earners on the edge of rental stress.

Adelaide is as unaffordable as Sydney, with many outer suburbs slipping out of reach for average earners. A median rent of $560 consumes 30% of the average rental household income.

Affordability in Hobart has remained stable over the past year, at a point that is moderately unaffordable even for average-income rental households. This is, in part, driven by a limited supply of rental housing and a low share of medium and high-density homes. A median rent of $520 now takes 28% of an average rental household income, pushing many households to the brink of rental stress.