Cotality’s latest Chart Pack published on Wednesday reveals national rents have jumped 43.9% over the five years to September 2025.
Citing the ABS Wage Price Index (WPI), the report shows wages only rose 17.5% over the same period, highlighting why renters are losing the affordability race.
“For many households, that means a lot less flexibility in the budget, and far fewer options about where and how they live,” said Tim Lawless, Cotality research director.
The widening gap, more than two and a half times, marks a sharp reversal of the previous five-year period, when wages were generally growing faster than rents across most states and territories.
“Before the pandemic, renters in many parts of Australia were seeing wages grow a little ahead of rents, or at least keep pace,” Mr Lawless said.
However, the combination of low vacancy rates, diminishing household sizes, and limited supply since 2020 has “pushed the market into a very different phase”.
Mr Lawless describes the current rental market as “one where rents are clearly in the driver’s seat”.
Where rents rise faster than wages
Western Australia leads the rental surge, with rents soaring 66% over the past five years, versus an 18.5% rise in wages.
“Nowhere is the pressure more evident than in Western Australia, where rents have climbed by around two-thirds in just five years,” Mr Lawless said.
“Even with wages growing a little faster than the national average, they have come nowhere near keeping up with housing costs.”
Per the latest ABS quarterly WPI, WA recorded the highest quarterly and annual growth in wages across all states and territories in September 2025 at 1.5% and 4%, respectively.
Meanwhile, the Cotality report highlighted that the ACT is the only market where rent and wage outcomes have been broadly aligned over the period, with rents up 18.5% and wages 17.8% higher over the five years to September 2025.
“In the ACT, income growth has managed to track rental growth more closely, which has helped contain the deterioration in affordability compared with other parts of the country,” Mr Lawless said.
In ABS’s Q3 2025 WPI, the ACT posted the second-highest annual wage growth after WA at 3.9%.
Rental growth reaccelerates
Over the 12 months to September 2025, national rents rose 4.3%, outpacing a 3.4% rise in wages.
Rent growth accelerated further to a 5.4% annual increase over the 12 months to January 2026.
“The fact that rental growth is accelerating, even after such a large cumulative increase since 2020, is a real concern,” Mr Lawless noted.
“It suggests demand for rental accommodation still far exceeds available supply, and that renters are facing an even larger portion of their income just to keep a roof over their heads.”
Cotality's latest housing affordability metrics for the September quarter 2025 show rental households are now dedicating an average 33.4% of their pre-tax income to rent – a record high and well above what is considered to be under rental stress.
The ABS defines “rental stress” as spending more than 30% of gross income on rent.
By comparison, households were spending 26.2% in the September quarter 2020.
Rents likely to outpace wages
Mr Lawless said rental conditions were unlikely to normalise quickly without a sustained lift in supply.
“With vacancy rates still around record lows in many markets and new housing completions running below what is needed to meet population growth, it is hard to see rents materially easing in the near term,” he said.
According to the research director, unless there is a “meaningful” acceleration in wage growth or a step-change in rental supply, the risk of further affordability deterioration for lower-income households remains.
Mr Lawless said policy measures that support housing supply, including more build-to-rent projects, incentives for private investment, and planning reforms that enable greater density in well-located areas, would be critical to easing the pressure.
“Closing the gap between rent and income growth will require a coordinated effort across governments, industry, and investors,” he said.
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