A long queue of prospective renters competing for a one-bedroom Sydney apartment priced at an eye-watering $885 a week snaked around the corner of a road on the weekend. It’s a familiar but confronting sight for Australian renters under pressure to secure a home.
The scene from the Surry Hills street, in Sydney’s inner suburbs, underscores the anxiety many tenants feel as vacancy rates continue to tighten and rents climb. One leading property advisor says it should also act as a warning to landlords.
Australia is on the cusp of hitting a “tipping point” in the rental market this year. Tenants can no longer afford the skyrocketing rental prices, a leading property advisor has warned ahead of another “bad” year predicted for renters.
Stacey Holt, from Stacey Holt Real Estate Excellence, told Yahoo News Australia that as wages remain stagnant and the cost of living continues to soar, fewer and fewer Aussies will be able to afford the ever-growing rental asking prices.
“We’re going to reach a tipping point,” she told Yahoo. “There is a certain price range that people cannot afford.”
She believes this will mean “less people lining up outside opens” as seen in Sydney this weekend and eventually seeing “prices winding back”.
Have you been impacted by Australia’s tough rental market? Contact newsroomau@yahoonews.com
Stacey Holt predicts Australia isn’t far away from a pull back in rental prices. Source: Supplied
It comes as the latest Cotality data published on Wednesday found rent prices jumped up 5.2 per cent in the last year, compared to 4.8 per cent in 2024.
A lack of supply is the major driver behind the price of rents, with national rental listings roughly 11% lower than a year ago through the December quarter, and 17% down on the previous five-year average.
Key rental market stats
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National median rent has risen 42.9 per cent since December 2020 to reach $681 per week
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Vacancy rates fell to 1.7 per cent, well below the pre-COVID decade average of 3.3 per cent
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Regional markets were hit hardest, with rents up 6.2 per cent compared to 4.8 per cent across the combined capitals.
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Sydney remains the most expensive capital, with median dwelling rents at $817 a week
Tim Lawless, Cotality’s Research Director, said the result was “bad news” for both renters and inflation.
“The ongoing growth in rental costs is bad news for renters, with Cotality’s national rental index surging 42.9% over the past five years, adding approximately $204/week to the median rental value,” he said.
Based on affordability metrics as of September, households are now dedicating a record high 33.4 per cent of their pre-tax income to pay rent.
“The reacceleration in rental values is also bad news for inflation and the cash rate outlook as rental costs hold a significant weight in the CPI calculation,” he said.
Rental affordability hits critical threshold
As a general rule of thumb, property managers try to keep rental costs to within 30 per cent of household income for prospective tenants, meaning that rental affordability has surpassed this as of December 2025.
Any more can lead to housing stress for tenants and pose a risk to property owners too.
“There is only a small amount of people that can afford $1,000 a week,” Holt said.
She described this as a “risk” to both renters and property managers, and the investors they represent.
Holt said she’s heard of examples where renters are paying up to 60 or 70 per cent of their income on their rent.
“It’s horrific,” she said.
“It’s very hard for property managers,” she explained, adding they are often blamed in the process.
“We did not create this mess, it’s not us, and we’re easy to blame,” she said, pointing to “long-term government policy and failures at all levels” that have contributed to the issue.
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