Every tenant approaching a lease renewal is asking the same question: how much more this time? The honest answer from the data is “more, but more slowly”, with meaningful differences between cities and a possible turning point late in the year. Here’s the full outlook.
Where Rents Sit Right Now
After briefly cooling, rental growth rebounded through autumn: national rents rose 2.1 per cent in the March quarter alone and sit around 5.7 per cent higher than a year ago, well above inflation. The cumulative toll is the real story, five years of growth has added roughly $200 a week to the typical rent, and renters now devote a record share of household income, around 33 per cent, to keeping a roof overhead.
“Rents are clearly in the driver’s seat,” Cotality research director Tim Lawless has observed of the post-2020 market.
Vacancy remains the engine: at around 1.2 per cent nationally, with every capital under 2 per cent, the market stays firmly undersupplied.
What the Forecasters Expect
The major forecasts cluster in a similar band. KPMG projects national rent growth of about 3.5 per cent annually through 2026 and 2027, above the long-run average but well below the peaks of recent years. Domain’s capital city forecasts see record highs everywhere, led by rises of around 4 per cent in Sydney, Brisbane, Adelaide and Perth, with Sydney’s median asking rent heading toward $815 a week, roughly $30 a week more, while Melbourne brings up the rear at about 2 per cent.
Translation for a typical budget: plan for increases in the $10 to $30 a week range at renewal depending on your city, with Melbourne tenants best placed and Sydney, Perth and Brisbane tenants facing the firmest markets.
The Possible Turning Point
There’s a genuine, if modest, source of hope in the second half of the year: population growth is slowing while new housing completions rise, and forecasters expect vacancy rates to drift upward as those forces meet. That doesn’t mean rents fall, it means the pace of increase should keep easing, and bargaining power inches back toward tenants for the first time in years.
What Tenants Can Actually Do
At renewal, knowledge is leverage: check comparable listings in your building and suburb before responding to an increase, and if the asked rise is above market, say so with examples, landlords weigh the cost of vacancy too. Remember increases must follow your state’s rules on frequency and notice, and excessive increases can be challenged through your state tribunal.
Longer-term, the calculus is shifting at the margins: with purchase prices softening in Sydney and Melbourne while rents climb, and the 5% Deposit Scheme now uncapped, some established renters are finding the buy-versus-rent maths closer than it’s been in years. That’s a personal decision and this is general information, not financial advice, but it’s worth running your own numbers annually rather than assuming renting remains the only option.
The Bigger Picture
The rental market’s fundamentals haven’t changed: too few homes, too much demand, and no quick fix. But the trajectory has, from runaway growth to above-average growth with easing ahead. For tenants, that means budgeting for increases while negotiating with more confidence than the last few years allowed, and watching the back half of 2026 for the first real signs of balance.
Epik Wire covers renting and the property market in plain language for tenants and owners. Subscribe to our newsletter to stay informed.
