Domain’s latest Rent Report published Thursday found combined capital city house rents rose by $20 over the three months to June.
Per Domain, it was the strongest quarterly increase in almost two years.
Sydney house rents posted the largest jump, up 6.3%, or $50, to a record $850 a week, the city’s largest quarterly increase since 2022.
Tenants in Sydney units also experienced a surge in rent, as they now need to fork over an additional $30 (up 4%) per week to pay $780, also a record high.
Investor behaviour shifts as policy changes become clear
Domain chief residential economist Dr Nicola Powell said the timing of the rental rebound suggested more than seasonal factors at play.
"The acceleration we've seen this quarter was too sudden and concentrated to be explained by seasonal factors alone," she said.
Dr Powell said many landlords appeared to be responding to proposed housing investment policy changes by increasing asking rents where market conditions allowed.
See also: Budget reforms drive Aussie investors to rethink property exposure
"At this stage, we’re seeing the impact more in landlord sentiment than in rental availability," she added.
While rental supply had not yet materially deteriorated, expectations about future investment conditions were already influencing landlord behaviour, according to Dr Powell.
"However, over time, we expect policy changes to have a greater influence on investor behaviour, which could ultimately affect rental supply."
Rental market splits along affordability lines
Despite vacancy rates remaining tight across all capital cities, rental growth isn’t occurring uniformly across the country.
Domain found rental growth accelerated in Brisbane, Canberra and Darwin alongside Sydney.
On the flipside, Melbourne, Adelaide, Perth and Hobart showed signs of affordability constraints limiting rental growth.
Median rental asking price for houses and units (June 2026)
|
Capital city |
Houses |
Quarterly change |
Units |
Quarterly change |
|
Sydney |
$850 |
6.3% |
$780 |
4.0% |
|
Melbourne |
$600 |
0.8% |
$600 |
0.0% |
|
Brisbane |
$700 |
2.9% |
$660 |
0.0% |
|
Adelaide |
$650 |
1.6% |
$550 |
0.0% |
|
Perth |
$750 |
0.4% |
$700 |
0.7% |
|
Canberra |
$710 |
1.4% |
$580 |
0.0% |
|
Darwin |
$760 |
5.6% |
$650 |
8.3% |
|
Hobart |
$625 |
0.8% |
$520 |
4.0% |
|
Combined capitals |
$700 |
2.9% |
$680 |
0.7% |
Data source: Domain Rent Report June Quarter
Brisbane’s median weekly house rents rose 2.9% ($20) during the quarter to a record $700.
The title for the strongest performing rental market over the year goes to Darwin, as house rents jumped 11.8% and unit rents surged 18.2%.
The result sees Darwin overtake Perth as Australia's second most expensive rental market for houses.
By contrast, Melbourne remained one of the weakest-performing rental markets, with weekly house rents increasing by just $5 to $600 during the quarter, while unit rents were unchanged.
Annual growth for Melbourne units slowed to a four-and-a-half-year low.
Perth’s house rents rose a modest 0.4% over the quarter to $750 a week despite the city’s vacancy rate sitting at just 0.5%.
Dr Powell said a growing divide had emerged between markets where tenants could still absorb higher rents and those approaching affordability limits.
"Melbourne, Adelaide, Perth and Hobart are showing signs that affordability limits are starting to cap further rent increases, even with vacancy rates remaining exceptionally low," she said.
Yields rise but investors still face profitability challenges
Separate data from Cotality’s Rental Review Q2 2026 shows the national gross rental yield increased to 3.7% in June, up from 3.5% at the end of 2025.
Sydney’s gross rental yield rose to 3.3%, while Melbourne’s climbed to 3.9% off the back of rapid home declines.
Yields remain highest in Darwin at 6.1%.
Despite improving rental returns, Cotality head of research Gerard Burg said investors still faced difficult economics.
"Given the changes to investor taxation policy in this year's Federal Budget, most notably the removal of negative gearing for existing housing stock purchases from 1 July 2027, it is critical to note that gross yields remain well below the cost of capital," Mr Burg said.
"There are relatively few locations across Australia where a local investor could achieve a positively geared property under typical leverage rates."
See also: How rental yield works
While gross rental yields are expected to edge higher in the near term, Cotality said affordability limits could put the lid on further rental growth.
"The pace of rental growth in the coming quarters will increasingly be dictated by what tenants can realistically afford to pay," Mr Burg said.
First signs of negative gearing reform?
Both Domain and Cotality highlighted investor taxation changes as a major factor influencing market sentiment in their June quarter reports.
Cotality reported all capital cities continue to have vacancy rates below 2% and national rental listings remain 16.7% below the five-year average.
While rental supply remains exceptionally tight, analysts believe the longer-term impact will depend on whether investors alter purchasing decisions once the changes take effect.
"The real test will come in the months and years ahead as investors adjust to the new policy environment and those decisions begin to flow through to housing availability and rental conditions," Dr Powell said.
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