Australian rents hit a record share of household income: what it means for first home buyers

Renters across Australia are now handing over a record share of their income just to keep a roof over their head. The latest Cotality Rental Review shows the national median weekly rent has climbed to approximately $705, with typical renters now spending close to a third of household income on rent alone. For anyone trying to save a deposit while renting, that squeeze changes the maths on whether to keep renting, buy now, or rentvest.

Rents have hit a record share of household income

Annual rental growth reaccelerated to 5.9% in the June quarter, up from a low of around 3.4% in mid-2025, even as the quarterly pace eased slightly to about 1.6% from 2.1% in March. Sydney remains the most expensive capital city rental market at approximately $841 a week, while Hobart is the most affordable capital at around $632.

Behind the acceleration is a rental market that remains genuinely tight. Rental listings nationally are running around 17% below the five-year average, and vacancy rates are sitting close to record lows in most capital cities. With fewer properties available, landlords have more room to pass on larger increases at lease renewal, which keeps upward pressure on asking rents even as household budgets are already stretched by the cost of living.

This is not a uniform picture across the country. Regional rental markets have generally outperformed the capitals over the past year, and cities like Perth and Adelaide have seen steeper rent growth than Sydney or Melbourne as more renters compete for a smaller pool of available homes. The state you live in, and whether you are renting a house or a unit, can change how much of this national trend actually applies to your own budget.

Why a tighter rental market makes saving a deposit harder

• Every extra dollar in rent is a dollar not saved: a rising weekly rent bill directly competes with money that would otherwise go toward a deposit or a First Home Super Saver Scheme contribution.
• Lease renewals can move the goalposts: a bigger increase at renewal time can force a renter to dip into savings earmarked for a deposit, pushing out the timeline to buy.
• Budgeting gets harder to plan around: when rent growth accelerates unexpectedly, as it has this quarter, a savings plan built on last year's rent may no longer add up.

What this means for first home buyers

A record rent share of income does not mean every renter should rush to buy. It does mean the comparison between renting and buying is worth revisiting, particularly if your rent has moved up materially over the past year. A few practical steps may help:

• If your rent is rising faster than your savings, it may be worth comparing what buying in a more affordable suburb, or rentvesting in one, could look like against your current numbers.
• Buyers who are close to their deposit target may want to model whether locking in a purchase now, even somewhere less familiar, could work out better than continuing to absorb rent increases each year.
• Renters contributing to the First Home Super Saver Scheme should check how a tighter rental budget affects how much they can realistically set aside this financial year, since your lender will still assess actual affordability at loan application.

A mortgage broker or financial adviser can help translate these figures into a plan for your specific circumstances, particularly if your income, location or timeline do not fit neatly into national averages.

Run the numbers

Use these tools to see how the current rental market might affect your own decision:

• Rent vs Buy Calculator - compare the real cost of continuing to rent against buying at today's rates and prices
• Rentvesting Calculator - see whether buying an investment property while you keep renting could get you into the market sooner
• FHSS Calculator - work out how much you could realistically contribute toward a deposit through the First Home Super Saver Scheme this year