State of Rent for Investors: Australian Rental Market 2025
A well-chosen property investment is a proven way to increase your wealth over time so it is no surprise that many Australians have a passion for investing in bricks-and-mortar.
Australia's rental market has slowed from its peak in 2023, but it’s still considered a tight market. The demand for rental properties and median rental value continues to grow, albeit at a less rapid pace. Some regional areas are even outpacing the rental value growth of capital cities.
Property investors, experienced and novice alike, need to understand the current trends to see where the best opportunities lie. Here’s a quick rundown of Australia’s rental market from Cotality’s latest Rental Review:
Overview of the Australian rental market Q4 2025
Australia’s rental market is currently a landlord’s market with low vacancy rates indicating strong demand and an increase in rental prices. National rental values have risen by 1.3%, which is higher than last quarter by 0.9%. Rental growth has increased significantly as well, with rents rising 5.2% over 2025; this is an increase of 4.8% recorded in 2024.
It’s interesting to note that unit rents have been growing at a quicker pace than houses since May 2025. Unit rents are up 5.4% compared to house rents, which are only 5.1% in 2025. Regional rents are also growing faster, 6.2% in 2025, while the combined capitals are at 4.8%. Regional rental growth is surpassing that of the combined capitals in 2025.
Vacancy rates in Australia for all dwellings are skewed in favour of rental property owners, averaging 1.7%. The low housing stock is contributing to tighter vacancy rates, with national rental listings 11% lower than at the same time last year.
| Location | Median Rent | Current Rental Yield | Vacancy Rates |
|---|---|---|---|
| National | $681 | 3.6% | 1.7% |
| Combined regionals | $601 | 4.2% | 1.7% |
| Combined capitals | $711 | 3.4% | 1.8% |
| Canberra | $686 | 4.0% | 1.9% |
| Darwin | $688 | 6.2% | 2.6% |
| Hobart | $601 | 4.3% | 1.4% |
| Perth | $738 | 3.9% | 1.3% |
| Adelaide | $635 | 3.5% | 1.1% |
| Brisbane | $708 | 3.4% | 2.1% |
| Melbourne | $624 | 3.6% | 1.6% |
| Sydney | $817 | 3.0% | 2.0% |
Source: Quarterly Rental Review December 2025 (Cotality)
The cities with the highest median rents are Sydney, with $817, and Perth, with $738, both significantly higher than the national average. Sydney also has one of the highest vacancy rates across the country, at 2.0%, exceeding the national rate of 1.7%. The higher-than-average vacancy rate for the city may be due to significantly more expensive rent and cost of living.
Meanwhile, Perth has the second-highest median rent value while maintaining the second-lowest vacancy rate among capital cities, with only 1.3%. Even with a high median rent, the cost of living in Perth is still much lower compared to Sydney, which could be contributing to high rental demand.
Take note, Darwin may not have the highest median rent values, but it does have the highest yields among the capital cities, with 6.8%. This is interesting to note since the city also has the highest vacancy rate among the capital cities, with 2.6%.
As you can see, median rents, rental yields, and vacancy rates can vary widely between capital cities. Overall, affordability remains one of the main driving factors of growth. If the average Australian salary does not keep up with rising rent prices, renters may find it harder to find rental properties that are within their budget.
Houses vs Units: A closer look at Australia’s rental yields and rates
Unit prices are gaining momentum and are rising faster than house rents. Both property types saw an increase in value over the last quarter, but units saw significantly more. Yearly changes in rental rates are 5.1% for houses and 5.5% for units.
Houses and units don’t have a huge gap in terms of median rent values and rental yield percentages. Houses have slightly lower rental yields and higher vacancy rates compared to units, but generally higher median rent values. Sydney has the most expensive median rent prices for both types of property.
Vacancy rates for houses in capital cities are marginally higher than the national average. This could be due to more renters opting for units instead of moving to houses, or those choosing to live outside the capital.
Rental and yield statistics for houses
| Location | Median Rent | Year-on-year Change | Rental Yield | Vacancy Rates |
|---|---|---|---|---|
| National | $695 | 5.1% | 3.3% | 2.0% |
| Combined regionals | $605 | 6.1% | 4.2% | 1.8% |
| Combined capitals | $739 | 4.7% | 3.1% | 2.0% |
| Canberra | $736 | 2.8% | 3.7% | 2.4% |
| Darwin | $743 | 7.6% | 5.6% | 3.1% |
| Hobart | $619 | 6.7% | 4.2% | 1.6% |
| Perth | $750 | 5.8% | 3.7% | 1.3% |
| Adelaide | $657 | 3.7% | 3.3% | 1.2% |
| Brisbane | $732 | 6.2% | 3.2% | 2.4% |
| Melbourne | $652 | 2.5% | 3.1% | 2.0% |
| Sydney | $855 | 4.9% | 2.6% | 2.4% |
Source: Quarterly Rental Review December 2025 (Cotality)
For houses, the capital city with the highest rental yield is Darwin at 5.6%. It’s notably higher than the rest of the capital cities, seeing as it’s 1.4% more than Hobart, the second-highest rental yield with 4.2%. The rest of the capital cities have a yield of between 2.6% and 3.7%.
In terms of yearly changes, Darwin saw the most significant increase with 7.6% since the same time last year. The city that gained the least over the past year is Melbourne, with only a 2.5% rental increase.
Rental yield and statistics for units
| Location | Median Rent | Year-on-year Change | Rental Yield | Vacancy Rates |
|---|---|---|---|---|
| National | $643 | 5.5% | 4.4% | 1.4% |
| Combined regionals | $577 | 6.9% | 4.5% | 1.3% |
| Combined capitals | $655 | 5.2% | 4.4% | 1.5% |
| Canberra | $596 | 3.6% | 5.2% | 1.4% |
| Darwin | $598 | 9.2% | 7.4% | 2.1% |
| Hobart | $529 | 9.3% | 4.8% | 1.0% |
| Perth | $675 | 6.8% | 5.1% | 1.3% |
| Adelaide | $545 | 2.4% | 4.3% | 0.8% |
| Brisbane | $636 | 6.6% | 4.1% | 1.4% |
| Melbourne | $594 | 3.5% | 4.8% | 1.3% |
| Sydney | $758 | 6.0% | 4.1% | 1.7% |
Source: Quarterly Rental Review December 2025 (Cotality)
The rental market for units seems more competitive in the capital cities, with most vacancy rates not exceeding 2%. Adelaide, in particular, has a vacancy rate of 0.8%, which could point to high demand and low dwelling stock.
Hobart has seen the most growth among the capital cities with a 9.3% rental change over the year. Even so, it still has the lowest median rent value among the capital cities. It’s also below the combined capital average.
What does this mean for investors?
When investing in real estate, looking at the rental statistics can help you understand market trends. But it's important to note that real estate trends are also affected by demographics, interest rates, and economic factors. Check individual suburb reports to get a better grasp of the local real estate market.
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Disclaimer: The information provided in this article is general in nature and does not constitute financial or legal advice. Please seek professional advice tailored to your circumstances before making any financial decisions.
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