By a Property Correspondent

Australian tenants are grappling with the toughest affordability conditions on record as the cost of renting skyrockets past income growth. New data reveals that national rents have risen nearly three times faster than wages over the past five years, creating a “great divergence” that is rapidly eroding household budgets.

According to the February 2026 Chart Pack released by property analyst firm Cotality, national rents surged by 43.9% in the five years to September 2025. In stark contrast, wages grew by just 17.5% over the same period.

Tim Lawless, Cotality’s research director, described the market dynamics as a sharp reversal of pre-pandemic trends. “Before the pandemic, renters in many parts of Australia were seeing wages grow a little ahead of rents, or at least keep pace,” Mr. Lawless said.

“Since 2020, a combination of tight vacancy rates, smaller household sizes and sluggish new housing supply has pushed the market into a very different phase, one where rents are clearly in the driver’s seat”.

The Geography of Pain

The pressure is unevenly distributed across the continent. Western Australia has emerged as the epicentre of the crisis, recording the steepest increases of any jurisdiction. Rents in the west have soared by 66% over the last five years, dwarfing the state’s 18.5% wage growth.

“Nowhere is the pressure more evident than in Western Australia, where rents have climbed by around two-thirds in just five years,” Mr. Lawless noted.

Conversely, the Australian Capital Territory remains the only market where outcomes have remained aligned. In the ACT, rents lifted 18.5% against wage growth of 17.8%, largely containing the affordability deterioration seen elsewhere.

Re-acceleration and Record Lows

Hopes that the rental market might be cooling have been dashed by the latest figures. After a brief easing, rental growth has re-accelerated, rising 5.4% over the 12 months to January 2026.

This relentless growth has pushed affordability to new lows. Cotality’s metrics show that rental households are now dedicating a record average of 33.4% of their pre-tax income to rent, up significantly from the decade average of 29.2%.

Driving this competition is a chronic shortage of housing stock. Total listings nationally are 17.8% lower than at the same time last year. This scarcity is also impacting purchase prices, with national dwelling values rising 9.4% annually to reach a total market value of $12.4 trillion.

Mr. Lawless warned that without a “step-change” in supply or a meaningful acceleration in wages, the outlook for lower-income households remains dire.

“Closing the gap between rent and income growth will require a coordinated effort across governments, industry and investors,” he said. “The sooner we can bring more supply to market, the sooner renters will start to see some relief”.