Three rental trends impacting property investors in 2026
After several years of rapid rent increases, Australia’s rental market is entering a new phase. The latest Domain rental report shows rents remain high and competition is still strong, but affordability constraints are increasingly shaping outcomes. For property investors, the story in 2026 is likely to be less about across-the-board growth and more about selectivity.
During 2025, house rents rose 2.3% in the combined capital cities and 5.3% in the combined regions. Unit rents increased 3.2% in the capitals and 7.3% in the regions. Rents are now at record highs in every capital city except Melbourne, underscoring just how tight conditions have been.
However, momentum has clearly shifted. According to Domain, Australia’s rental market is adjusting as renters reach the limits of what they can afford. Rents remain elevated and competition for properties is still intense, but affordability is increasingly capping how far and how fast rents can rise.
Three rental trends in 2026
Across the capitals, three clear trends are emerging.
- Rental price growth has become more selective. Broad-based momentum has faded, with growth now concentrated in specific cities and dwelling types rather than evenly spread nationwide.
- Vacancy rates remain historically tight across most capitals, continuing to favour landlords.
- Slower rent growth is being driven not by weaker demand, but by renters’ reduced capacity to absorb further increases.
Domain’s Chief of Research and Economics, Nicola Powell, said the market is reaching an important turning point. “Australia’s rental market is reaching the point where renters simply can’t afford to pay much more, even though competition remains strong,” she said. “Rents are still at record highs, but household budgets are under pressure.”
In many areas, Dr Powell noted, renters now need incomes above $100,000 to rent comfortably. “The market is no longer moving in one direction,” she said. “Rent changes now depend heavily on where you live and whether you’re renting a house or a unit.”
Brisbane stands out as an exception, with rental growth reaccelerating for both houses and units. Elsewhere, growth is slowing or stabilising as tenants hit what Dr Powell described as an “affordability ceiling”.
What does this mean for investors?
For investors, conditions still broadly favour landlords, with low vacancy rates across the capitals. However, the ability to push rents materially higher is weakening. The next phase of the cycle is likely to be defined by high rent levels, slower growth and greater divergence between locations and property types, rather than the rapid, broad-based increases of recent years.
Keen to review your investment strategy? We can help you consider how rental conditions and funding options may shape your next move.