Australia’s rental market has plunged to unprecedented levels of unaffordability, creating severe housing stress for tenants nationwide. According to the latest REA Group rental affordability report, the fundamental imbalance between income growth and rental prices has created the most challenging conditions since records began in 2008.
Statistical analysis reveals a stark disparity: Australians earning the median salary of $124,000 can currently afford only 37% of rental properties advertised between July and December 2025. For those on more modest incomes approaching $75,000, the situation becomes critically constrained with merely 2% of available rentals within financial reach.
Regional analysis demonstrates significant variation across states. New South Wales maintains its position as the least affordable state, where typical income households can access just 25% of rental properties. South Australia follows closely with only 19% affordability, while Western Australia and Queensland show slightly better but still concerning rates at 24% and 29% respectively. Victoria emerges as the sole exception, recording measurable improvements in rental affordability over the past twelve months and now leading as the most affordable state by a considerable margin.
The crisis has developed through a perfect storm of economic factors. REA Group senior economist Angus Moore identifies that national rents have surged by 55% since the pandemic’s onset in 2020, dramatically outpacing wage growth which has increased by just over 25% during the same period. The numerical reality shows weekly rental prices escalating from a 2020 average of $420 to the current $650, placing enormous strain on household budgets.
Most alarmingly, the most affordable segment of the rental market has experienced the steepest price increases. Properties at the budget end have jumped from $280 per week to $450 – a staggering 61% increase between 2018-19 and 2025-26. This disproportionate inflation at the lower end creates particularly severe challenges for low-income renters, effectively pricing them out of the market entirely. Even households in the 70th income percentile, earning approximately $190,000 annually, find themselves limited to just 8% of advertised rentals for the 2025-26 period.
The decade-long decline in rental affordability reflects structural economic issues that require comprehensive policy solutions to address the growing housing inequality across Australian society.