A profound and uncomfortable shift is reshaping Australia's rental landscape, with new research confirming that living in sought-after locations is increasingly the preserve of those earning six-figure salaries. The latest data paints a particularly stark picture for the nation's capital.
The Growing Affordability Gap in the Capital
Domain's chief of research and economics, Dr Nicola Powell, states that rental affordability has deteriorated significantly since 2019. "Across the combined capitals, a two-person household earning average wages would spend 21.1 per cent of its income renting a typical home," she explains. In Canberra, this figure sits at 20.7 per cent, reflecting what Powell notes is one of the longest periods of sustained rental tightness in the country's history.
The financial threshold to rent a typical home in Canberra without undue stress is now substantial. To comfortably afford a house, a household requires an annual income of $121,333. For a unit, the required income is $100,533. This creates a premium of up to $20,800 in extra annual income needed to choose a house over a unit.
Suburban Divide: From Red Hill to Belconnen
The research highlights a dramatic geographical split in rental costs within the ACT. The most expensive suburbs are concentrated in the inner south, including areas like Red Hill, Deakin, Campbell, Kingston, and Yarralumla. In stark contrast, the most affordable rental options are found in suburbs such as Belconnen, Scullin, Page, Gordon, and Phillip.
The numbers tell the story of two different cities. In Red Hill, the average weekly rent hits $1,100, demanding a household income exceeding $190,000 per year to manage without financial strain. Meanwhile, in Belconnen, the weekly median is nearly half, at $585, which requires an annual income of approximately $101,000.
Underlying Market Pressures and Tenant Profiles
Dr Powell points out that the gap between the income needed for a house versus a unit varies across cities due to differences in housing supply, tenant profiles, and income levels. "In Darwin, Canberra, Adelaide and Perth, units tend to cater to lower-income renters, while houses are typically sought by higher-income families seeking more space," she says. "This demand split contributes to a larger affordability gap between houses and units."
Despite a slight easing, the underlying market remains tight. As of December 2025, the vacancy rate in the ACT was 1.5 per cent. While this was the highest monthly figure recorded that year, it still represented the lowest December reading since 2021, indicating ongoing competitive pressure for available rentals.
The data underscores a new reality for Canberra residents: choice in housing location now comes with a high price tag, effectively reserving many of the capital's most desirable postcodes for those with top-tier earnings.
