Domain’s latest Rental Report published on Thursday revealed despite record-low vacancy rates, rent growth is stalling or becoming increasingly uneven as tenants reach the limit of what they can pay.
National vacancy rate fell to a record low 0.7% in the March quarter, yet rents are flat or uneven, particularly in Sydney, Melbourne, and Adelaide.
Domain’s findings point to a clear shift in the market dynamics, with affordability, not availability, now the dominant force for shaping rental outcomes.
“Vacancy rates are lower than ever and supply remains incredibly tight, but rent growth is no longer accelerating everywhere. That tells us households simply can’t stretch any further,” said Dr Nicola Powell, Domain’s Chief Residential Economist.
Sydney hits affordability wall
For investors, the change is most evident in Sydney, where rental prices have plateaued despite some of the tightest conditions on record.
Median house rent in the NSW capital is stuck at $800 per week in the first three months of 2026, unchanged from the previous quarter.
Median weekly unit rents in Sydney likewise stalled at $750.
According to Dr Powell, it’s the first time in five years rents have stalled across multiple quarters despite some of the tightest rental conditions on record (0.8% vacancy rate in Sydney).
As it stands, yield assumptions based solely on tightening vacancy rates are increasingly exposed, particularly in high-price cities such as Sydney where rents have already pushed household budgets to their limits.
“In many cities, we’re seeing rents hold flat or rise unevenly despite worsening shortages,” Dr Powell said.
“Affordability, not demand, is now the key constraint.”
Perth posts highest growth, Melbourne’s recovery patchy
While Sydney has clearly hit an affordability ceiling, rental performance remains uneven nationwide.
Perth recorded the strongest rebound in rents, both in houses (up 5.7%) and units (up 5.3%), suggesting more headroom before affordability bites.
By contrast, Melbourne’s recovery remains patchy, showing stronger growth in units (up 4.3%) than houses (up 1.7%) as renters in the Victoria capital appear to trade space for price.
“Units offer relative relief, but only up to a point,” Dr Powell pointed out.
“More renters are shifting toward units in search of affordability, resulting in steadier unit rent growth than houses,” she added.
“However, limited supply and a lack of suitable family-friendly apartments mean this is only a partial release of pressure.”
What this means for landlords
As renters become more price-sensitive, property investors may need to recalibrate expectations.
Landlords may face longer vacancy periods if pricing overshoots the market or if they don’t understand where renters can still pay and where they cannot.
However, Dr Powell maintains Australia’s current rental conditions “still favour” landlords overall due to lack of supply but warned the pace of growth has clearly slowed.
“This isn’t because conditions have eased, but because renters have hit their limits.”
House median asking price
|
Capital City |
March 2026 |
December 2025 |
Quarterly Change |
|
Sydney (NSW) |
$800 |
$800 |
0.0% |
|
Melbourne (VIC) |
$590 |
$580 |
1.7% |
|
Brisbane (QLD) |
$680 |
$670 |
1.5% |
|
Adelaide (SA) |
$640 |
$625 |
2.4% |
|
Perth (WA) |
$740 |
$700 |
5.7% |
|
Canberra (ACT) |
$700 |
$700 |
0.0% |
|
Darwin (NT) |
$720 |
$700 |
2.9% |
|
Hobart (TAS) |
$620 |
$600 |
3.3% |
|
Combined Capitals |
$680 |
$665 |
2.3% |
Source: Domain Rental Report, March 2026
Units median asking price
|
Capital City |
March 2026 |
December 2025 |
Quarterly Change |
|
Sydney (NSW) |
$750 |
$750 |
0.0% |
|
Melbourne (VIC) |
$600 |
$575 |
4.3% |
|
Brisbane (QLD) |
$660 |
$650 |
1.5% |
|
Adelaide (SA) |
$550 |
$530 |
3.8% |
|
Perth (WA) |
$695 |
$660 |
5.3% |
|
Canberra (ACT) |
$580 |
$580 |
0.0% |
|
Darwin (NT) |
$600 |
$600 |
0.0% |
|
Hobart (TAS) |
$500 |
$480 |
4.2% |
|
Combined Capitals |
$675 |
$650 |
3.8% |
Source: Domain Rental Report, March 2026
Image by Steppe Walker on Pexels
