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Australia's rental market reached record highs in 2025, with national median rents hitting $675 per week for apartments and $685 for houses.
Tight vacancy rates below 1% in major cities like Sydney, Brisbane, and Perth are driving continued rent growth, while regional areas offer yields up to 8.3% for savvy investors seeking higher returns.
If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.
Australia's rental market in 2025 shows record-high rents with Sydney leading at $750/week for apartments and $900/week for houses, while regional areas offer better yields ranging from 3.7% to 8.3%.
Vacancy rates remain critically low across all major cities, creating a landlord-friendly market that's expected to continue through 2026 as housing supply struggles to meet demand.
| City | Apartment Rent (Weekly) | House Rent (Weekly) | Vacancy Rate | Rental Yield |
|---|---|---|---|---|
| Sydney | $750 | $900 | 0.8-0.9% | 3.2-3.5% |
| Melbourne | $600 | $580 | 1.2% | 3.5-3.8% |
| Brisbane | $650 | $670 | 0.8% | 4.2-4.5% |
| Perth | $650 | $700 | 0.4% | 4.8-5.2% |
| Adelaide | $520 | $620 | 0.4% | 4.5-4.8% |
| Canberra | $620 | $850 | 1.0-1.2% | 3.8-4.1% |
| Regional Average | $570 | $570 | 0.5-0.8% | 5.5-8.3% |
What's the current average rent across Australia, broken down by major cities and regions?
As of September 2025, Australia's rental market shows significant variation between major cities and regional areas.
Sydney leads all major cities with the highest average rents, recording $750 per week for apartments and $900 per week for houses. Melbourne presents a unique situation where apartments ($600/week) actually command higher rents than houses ($580/week), reflecting the city's strong inner-urban apartment demand.
Brisbane, Perth, and other capital cities show more balanced rent structures. Brisbane records $650/week for apartments and $670/week for houses, while Perth shows $650/week for apartments and $700/week for houses. Adelaide offers the most affordable capital city rents at $520/week for apartments and $620/week for houses.
Regional Australia presents a different picture entirely, with median rents averaging $570 per week nationwide. Regional rents range from under $420 per week in South Australia to $650 per week in Queensland's regional centers.
The national median sits at $675 per week for apartments and $685 per week for houses, representing record-high levels driven by extremely tight vacancy rates and strong population growth.
How do rents differ between apartments, houses, and townhouses?
Houses generally command higher rents than apartments in most Australian markets, with notable exceptions in Melbourne and some inner-urban areas.
The rent premium for houses reflects larger living spaces, private outdoor areas, and greater privacy. In Sydney, this premium averages $150 per week, while in Brisbane and Perth, houses command $20-50 more per week than comparable apartments.
Townhouses typically fall between apartments and detached houses in rental pricing, though they're not always reported separately in market data. Townhouses offer more space than apartments but come with shared land arrangements and often strata fees that can affect overall returns.
Apartment rents have grown faster than house rents in many markets during 2024-2025, particularly in Melbourne where strong inner-city demand and limited supply have driven apartment rents above house rents. This trend reflects changing lifestyle preferences and the concentration of employment in CBD areas.
The choice between property types significantly impacts rental yields, with apartments generally offering higher gross yields due to lower purchase prices relative to rent, despite houses typically commanding higher absolute rents.
What's the typical rent by property size, like studios, one-bedroom, two-bedroom, or larger homes?
Property size directly correlates with rental pricing, with clear premiums for additional bedrooms and living space.
Studios represent the entry-level rental market, averaging $450 per week in Sydney, $360 in Melbourne, and $390 in Brisbane. These compact properties target young professionals, students, and singles prioritizing location over space.
One-bedroom apartments show significant price jumps, ranging from $550-650 per week in Sydney, $360-565 in Melbourne, and $390-618 in Brisbane. The wide ranges reflect quality differences, with premium buildings and prime locations commanding top prices.
Two-bedroom apartments represent the market sweet spot for many renters, with Sydney averaging $650-750 per week, Melbourne at $530+, and Brisbane at $530-650. These properties attract young couples, small families, and sharers.
Larger homes with 3-4 bedrooms command premium rents, ranging from $900-1,500+ per week in Sydney, $580-900 in Melbourne, and $670-900+ in Brisbane. High-specification homes in desirable locations can exceed these ranges significantly.
Per-room pricing shows apartments averaging $400 per room nationally, while houses average $217 per room, making house rentals more cost-effective for larger households or shared accommodation arrangements.
What's the total rental cost when you include fees, taxes, and other hidden expenses?
Rental costs extend beyond weekly rent to include various fees, bonds, and ongoing expenses that tenants and landlords must consider.
Tenants typically pay rent plus utility costs, with bonds (security deposits) equal to 4-6 weeks rent. Water usage charges may apply depending on the lease agreement and property type. Initial costs include bond, first month's rent in advance, and potential real estate agent fees.
Landlords face more complex cost structures including property management fees (5-10% of rent), insurance premiums, council rates, ongoing maintenance, and body corporate fees for strata properties. Annual land tax applies in most states with varying thresholds.
Tax implications affect total costs significantly. Rental income is taxed at marginal rates, but landlords can deduct interest payments, repairs, management fees, insurance, and depreciation. Many investors experience negative gearing where deductible expenses exceed rental income.
Hidden costs for tenants may include utility connection fees, contents insurance, and potential rent increases during lease renewals. For landlords, unexpected maintenance, vacancy periods, and property management changes can impact total returns.
It's something we develop in our Australia property pack.
How much do mortgage payments compare to average rental income for investment properties?
Investment property mortgage payments often exceed rental income in today's market, particularly for new purchases in high-value cities like Sydney and Melbourne.
Investment loan interest rates typically run 0.1-0.5% higher than owner-occupier rates, with current rates around 6.5-7.5% for investment properties. On a typical $800,000 Sydney investment property, interest-only payments might reach $4,500-5,000 per month.
Rental income from the same property might generate $3,000-3,500 per month, creating negative cash flow of $1,000-2,000 monthly before considering other holding costs like rates, insurance, and management fees. This negative gearing scenario is common for new investors in major cities.
Regional and more affordable markets often provide better cash flow outcomes. A $400,000 Perth or Adelaide property might generate rental income closer to mortgage payments, particularly with higher yields of 4.5-5.5%.
Many investors rely on tax deductions to offset negative cash flow, with interest payments fully deductible against rental income and other income sources. However, this strategy requires sufficient income to service loans and absorb ongoing losses.
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What are some example rental prices for different property types in key cities?
Rental prices vary significantly across Australia's major cities, reflecting local market conditions, property quality, and location premiums.
| Property Type | Sydney | Melbourne | Brisbane | Perth | Adelaide |
|---|---|---|---|---|---|
| Studio Apartment | $450/week | $360/week | $390/week | $380/week | $320/week |
| 1-Bedroom Apartment | $550-650/week | $360-565/week | $390-618/week | $420-550/week | $350-450/week |
| 2-Bedroom Apartment | $650-750/week | $530+/week | $530-650/week | $550-680/week | $450-580/week |
| 3-Bedroom House | $900-1,200/week | $580-800/week | $670-850/week | $650-850/week | $550-750/week |
| 4+ Bedroom House | $1,200-1,500+/week | $800-1,100/week | $850-1,100+/week | $800-1,200/week | $700-950/week |
| Luxury/Premium | $1,500+/week | $1,100+/week | $1,100+/week | $1,200+/week | $950+/week |
What's the difference in returns between short-term rentals like Airbnb and long-term leases?
Short-term rentals can generate 30-60% higher gross returns than long-term leases during peak periods, but come with significantly higher risks and management requirements.
Airbnb and similar platforms allow property owners to charge premium rates, particularly in tourist areas or business districts. A Sydney apartment earning $700/week on long-term lease might generate $150-200/night as short-term rental, potentially reaching $1,000+ weekly during peak periods.
However, short-term rentals face higher vacancy risk, with occupancy rates varying seasonally and economically. Properties may achieve only 60-70% occupancy annually, reducing the gross return advantage. Additional costs include furnishing, cleaning services, higher insurance, and platform commission fees of 3-15%.
Long-term rentals provide stable, predictable income with lower management demands. Tenants typically sign 6-12 month leases, providing cash flow certainty. Property maintenance and management costs are lower, and wear-and-tear is generally reduced compared to short-term use.
Regulatory restrictions increasingly impact short-term rentals, with many councils limiting or banning the practice in residential areas. Sydney, Melbourne, and other cities have introduced strict regulations that can eliminate short-term rental opportunities entirely.
Successful short-term rental operations require expertise in pricing, marketing, guest management, and local regulations, making them suitable for experienced investors willing to actively manage their properties.
What are the current vacancy rates by city and property type, and how do they affect rents?
Australia's rental market shows critically low vacancy rates across all major cities, creating strong upward pressure on rents and a landlord-favorable environment.
Perth and Adelaide lead with the tightest markets at just 0.4% vacancy rates, indicating severe rental shortages. Sydney and Brisbane follow closely at 0.8-0.9% and 0.8% respectively, while Melbourne shows slightly higher but still tight vacancy at 1.2%.
These extremely low vacancy rates, well below the 2-3% considered balanced, drive continued rent growth as tenants compete for limited available properties. Property managers report multiple applications for every rental listing, often with offers above advertised rents.
Vacancy rates below 1% typically indicate landlord markets where rents can increase rapidly. The current environment allows landlords to be highly selective with tenants and achieve asking prices or higher. Properties that become available often rent within days of listing.
Different property types show varying vacancy patterns. Apartments in inner-urban areas often have lower vacancy than houses due to higher demand from young professionals and students. Regional areas generally maintain slightly higher vacancy rates but still remain well below historical averages.
The tight vacancy environment is expected to persist through 2026 as housing supply continues to lag population growth and rental demand.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What kind of tenant profiles are most common right now in the rental market?
Australia's rental market shows increasing diversity in tenant profiles, driven by changing demographics, housing affordability challenges, and lifestyle preferences.
Singles and young professionals dominate apartment and unit rentals, particularly in inner-urban areas. This group includes recent graduates, career-focused individuals, and people prioritizing proximity to employment and entertainment over space. They typically seek furnished or semi-furnished properties with good transport links.
Families and professional couples form the primary tenant base for houses and larger townhouses. This segment includes young families unable to purchase homes due to high prices, professionals in transition between cities, and established families choosing rental flexibility over ownership commitments.
Student renters continue to drive demand in university towns and inner-city areas, often sharing properties to reduce individual costs. International students represent a significant portion of this market, particularly in Sydney, Melbourne, and Brisbane.
Rental stress affects over 70% of tenants according to recent surveys, with many reporting emotional and financial strain due to high costs and intense competition. This stress manifests in tenants accepting properties quickly and offering above-market rents to secure accommodation.
Empty nesters and retirees increasingly choose rental over ownership, particularly in premium locations where purchasing costs are prohibitive. This emerging segment often seeks high-quality apartments with lifestyle amenities and maintenance-free living.
What are the current rental yields, and how have they changed compared to one year ago and five years ago?
Current gross rental yields across Australia average 3.7-3.9% nationally, representing a significant improvement from the lows experienced during 2019-2021.
Apartment yields currently outperform house yields in most markets due to faster unit rent growth and more moderate price increases. Sydney apartments yield approximately 3.2-3.5%, while houses yield 2.8-3.2%. Melbourne shows similar patterns with apartment yields of 3.5-3.8% versus house yields of 3.2-3.6%.
Compared to one year ago, yields have improved by 0.3-0.5 percentage points across most markets. This improvement reflects strong rental growth of 8-15% annually in major cities, while property prices have moderated or remained stable in many areas.
Five-year yield comparisons show more dramatic improvements. The 2019-2021 period saw yields fall to historic lows of 2.5-3.2% as property prices surged while rents remained constrained. Current yields represent a return to more sustainable levels, though still below long-term historical averages of 4-5%.
Regional markets offer substantially higher yields, with Northern Territory regional houses achieving 6.6% and Western Australia rural apartments reaching 8.3%. These markets benefit from lower property prices relative to rents and stronger local demand dynamics.
It's something we develop in our Australia property pack.
What are the smartest choices today for property investors looking for stable or high-yielding rentals?
Perth, Adelaide, and Brisbane emerge as the smartest choices for investors seeking combination of high yields and low vacancy rates in today's market.
Perth offers exceptional value with apartment yields of 4.8-5.2% and house yields of 4.5-5.0%, combined with just 0.4% vacancy rates. The city benefits from mining industry recovery, population growth, and relatively affordable property prices compared to Sydney and Melbourne.
Adelaide presents similar opportunities with yields of 4.5-4.8% and 0.4% vacancy rates. The city's affordable housing, growing population, and diverse economy provide stable rental demand without the price volatility of larger markets.
For investors seeking stability over maximum yields, professionally managed apartments in well-connected metropolitan areas offer consistent returns. Inner-urban units in Brisbane, Perth, and Adelaide provide good yields with strong tenant demand from professionals and students.
Regional lifestyle towns with proven demand fundamentals represent another smart strategy. Areas with universities, hospitals, or major employers often provide yields of 5.5-7.0% with reasonable vacancy rates and capital growth potential.
Short-term rental strategies suit experienced investors in suitable markets with low regulatory risk. Coastal areas, wine regions, and business centers can generate premium returns for investors willing to actively manage properties and navigate platform requirements.
What's the forecast for rents and yields over the next one, five, and ten years, and how does Australia compare with other major global cities?
Short-term forecasts through 2026-2027 predict continued moderate rental growth as extremely tight vacancy rates persist while housing supply slowly improves.
One to two-year outlooks suggest rental growth will moderate from current high levels of 8-15% annually to more sustainable 4-6% increases. Vacancy rates will remain below 1.5% in most major cities as population growth continues to exceed new housing completions.
Five-year projections indicate yields will remain steady or improve slightly if population growth continues and supply constraints persist. Regional yields are expected to remain most resilient, particularly in affordable markets with strong local economies and infrastructure development.
Ten-year forecasts depend heavily on economic cycles, migration patterns, and government housing policy responses. Australia's rental market fundamentals remain strong with continued population growth and urbanization trends supporting long-term demand.
Global comparisons show Australia currently outpacing most major international cities in rent growth post-pandemic. Australian yields remain competitive compared to North America and Europe, particularly in regional areas where yields of 5-8% exceed those available in comparable international markets.
Australia's rental market benefits from political stability, strong population growth through immigration, and limited housing supply relative to demand. These factors position Australian rental investments favorably compared to many global alternatives, despite higher entry costs in major cities.
It's something we develop in our Australia property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Australia's rental market in 2025 presents exceptional opportunities for investors willing to navigate tight conditions and high competition.
Record-high rents, critically low vacancy rates, and improving yields create a landlord-favorable environment expected to persist through 2026, making now an opportune time for strategic property investment in Australia's major cities and high-yield regional markets.
Sources
- Rent.com.au - June 2025 Rental Market Snapshot
- Aceland - Average Rent in Sydney
- Ray White Paddington - Townhouse vs House vs Apartment Investment
- Q Financial - Investment Property Comparison
- Upmove - Cost of Living in Australia
- Australian Taxation Office - Rental Properties 2025
- Labode Accommodation - Tax on Rental Income Australia
- Savings.com.au - Rental Income Tax
- Yard - Investment vs Homeownership
- Wealthy You - Investment Property Mortgages 2025