Australian renters are facing a financial breaking point, with the income required to avoid rental stress surging by more than half in just six years. Explosive new figures paint a dire picture of a market where affordability has collapsed to its lowest point in recorded history.
Income Needed to Survive Skyrockets
According to the latest PropTrack Rental Affordability Index, a household that needed $74,533 annually to stay out of rental stress six years ago now requires a staggering $112,667. This dramatic jump is pushing millions of Australians to the edge, with further pain forecast for 2026 when renters are set to fork out an additional $1,560 per year, equating to $30 extra each week.
The data confirms conditions have plunged to their worst level since records began in 2008. New South Wales, Tasmania, and Queensland are under the heaviest pressure, but even Victoria – still labelled the most affordable state – has seen a sharp decline.
Capital City Divide: Sydney's Extreme Squeeze
Sydney remains the toughest rental market by a significant margin. Households now need approximately $135,200 per year to afford a median-priced house. The divide within the harbour city is extreme: near the CBD, a comfortable life demands roughly $216,000 annually, while on the fringe it drops to about $112,000 before rising again in outer lifestyle regions.
Melbourne and Hobart offer slightly more breathing room, with required incomes sitting closer to $100,500. Melbourne has the narrowest gap between house and unit affordability in the country at just $900, a result of strong apartment supply and premium inner-city developments keeping unit rents competitive.
REA Group Senior Economist Anne Flaherty told 7NEWS.com.au the relentless squeeze shows no sign of easing. "Rents were sitting at record highs in every market in December and are expected to reach new records in 2026," she warned.
National Median Rent Hits New High
The PropTrack Market Insight report shows the national median rent rose 1.6% in the December quarter to $650 per week, pushing annual growth to 4.8%. Sydney holds its position as the most expensive city at $760 per week – about $9,620 more per year than Melbourne.
Interestingly, regional rents continue to outpace the capitals, rising 7.3% year-on-year to $590. Hobart recorded the strongest growth among the capitals, followed by Darwin and Perth. The tight markets in Perth and Brisbane, characterised by very low vacancy rates, are causing sharp increases that push the national average higher.
Flaherty noted that while population growth and limited supply are universal drivers, a handful of extremely tight markets are skewing the national picture. She also provided a stark benchmark for stress: "A renter is considered 'in stress' if more than 30 per cent of their gross income is spent on rent. If a renter is paying the national median rent of $650 per week, their gross household income would need to be $101,400 annually to sit under the 30 per cent threshold."
She urged renters to research available properties to understand how their rent compares locally. However, the outlook remains grim. "While rent growth is expected to continue moderating in 2026, vacancy rates remain low and population growth will fuel demand for more rentals," Flaherty said.
Building More Isn't the Simple Solution
Australian Community Housing chief executive Mark Degotardi said the figures expose a deep, long-running mismatch between the cost of building new rental housing and what households can actually afford. "We're short of the right housing in the right places at the right price points," Degotardi stated.
He highlighted a troubling trend: "Units should be the affordable option, yet they're now experiencing the sharpest pressure." His warning was clear – simply building more won't fix the crisis. "It matters what we build and where we build it. The gap between delivery costs and what renters can pay has never been wider, particularly in regional areas where rent growth is strong but development is hardest to make stack up."
For now, the most affordable pockets for renters in capital cities are now 30 to 40 kilometres from the CBD – a distance that dodges inner-city premiums but still allows for daily commuting. Across regional Australia, South Australia stands out as the most affordable area for renters, with a median weekly rent of $430.
