According to Domain’s latest Rent Report for the March 2025 quarter, rental price growth for houses across the capital cities has plateaued for three consecutive quarters, marking the slowest annual growth in four years.
Despite the slowdown, rents continue to sit at record highs across all capital cities, with vacancy rates remaining below 2 per cent nationwide.
Domain’s Chief of Research and Economics, Dr Nicola Powell, said the data points to changing market dynamics but still favors property owners.
“Despite a softening of growth, the data suggests Australia is still very much a landlord’s market,” Dr Powell said.
“Most cities experienced 5 per cent or less annual change, a sharp drop from the double-digit gains seen in recent years.
“Increasing supply is slowing price growth, and while it’s still not enough to fully meet demand – we can see that it’s helping to rebalance some of the tightest rental markets.”
The report shows Sydney, Melbourne, Brisbane, Adelaide and Perth all experienced their slowest March quarter growth in several years for house rentals.
Unit rents are also showing signs of moderation, with Perth recording its slowest March quarter since 2018, Adelaide since 2019, and Sydney since 2021.
Only Hobart and Darwin bucked this trend, recording their strongest March quarter since 2022.
Vacancy rates remain extremely tight in Adelaide, Perth and Hobart, all sitting at just 0.4 per cent, making these the most competitive markets for tenants in the country.
The cooling in rental growth appears to be driven by a combination of affordability constraints, gradual improvements in rental supply, and seasonal factors following the peak summer period.
Many tenants have reached their financial limits after several years of rapid increases, while rising investor activity and new property completions are slowly helping to rebalance the market.
Investment activity is now above decade averages across NSW, Queensland, South Australia, Western Australia and the Northern Territory, contributing to the slight easing in market conditions.
On the demand side, population growth is slowing, and some tenants are finding alternative arrangements to manage costs.
“The affordability ceiling is becoming increasingly apparent, with unit rents outpacing house rents in Sydney, Melbourne, Brisbane, Canberra and Hobart this quarter,” Dr Powell said.
Darwin has emerged as a standout market, recording the steepest annual gains for houses at 7.7 per cent, making it the second most expensive capital city for house rentals alongside Canberra.
“After several years of rapid increases, many tenants have hit their price ceilings, limiting landlords’ ability to push rents further,” Dr Powell said.