Australia’s Rental Growth Hits Four-Year Low, But Landlords Still In Control | Latest Domain Rent Report

Key takeaways

House rents: Record highs across all capital cities, though Sydney, Melbourne, Brisbane, Adelaide and Perth saw their slowest March quarter growth in several years.

Unit rents: Also at record highs, but growth was the slowest in years across most capitals - Hobart and Darwin were the only capitals to buck the trend.

Vacancy rates: Conditions are changing with a slight rise in supply, creating the highest vacancy rates for March in years. Despite this, the rental market remains highly competitive, especially in cities like Adelaide, Hobart and Perth, where vacancy rates sit at just 0.4%.

Australia’s capital-city rental markets are showing clearer signs of cooling, but renters are still facing tough competition, according to Domain’s latest Rent Report for the March 2025 quarter.

While rents continue to rise in many areas, house rental price growth across the combined capitals has now plateaued for three straight quarters, marking the slowest annual growth in four years.

Domain’s Chief of Research and Economics, Dr Nicola Powell said:

“Despite a softening of growth, the data suggests Australia is still very much a landlord's market.

Most cities experienced 5% 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 affordability ceiling is also becoming increasingly apparent, with unit rents outpacing house rents in Sydney, Melbourne, Brisbane, Canberra and Hobart this quarter.”

Houses

Table 1: House rents, quarterly and annual changes

• Sydney recorded its slowest March quarter since 2019, Perth since 2020, Melbourne and Brisbane since 2021, and Adelaide since 2022.
• Annual growth has slowed to its lowest point in nearly five years in Sydney and Perth, just over four years in Brisbane and Adelaide and just over three years in Melbourne.

Units

Table 2: Unit rents, quarterly and annual changes 

• Perth recorded its slowest March quarter since 2018, Adelaide since 2019, Sydney since 2021, and Melbourne and Brisbane since 2022. Conversely, Hobart and Darwin – cities that had seen relatively weaker conditions – recorded their strongest March quarter since 2022.
• Annual growth has slowed to its lowest point in 3.5 years in Brisbane, roughly three years in Sydney, Melbourne and Adelaide and 2.5 years in Perth.

What's driving the slowdown?

According to Domain, this cooling in rental growth is being driven by a combination of affordability constraints, a gradual improvement in rental supply, and the seasonal easing that tends to follow the peak summer turnover period.

After years of steep rent hikes, it looks like many tenants have finally reached their limit — they simply can’t afford to pay much more.

This is capping how far landlords can realistically push rents, even in high-demand areas.

At the same time, we’re seeing a lift in investor activity and a modest increase in new housing completions.

Now, while this new supply still falls short of meeting our growing housing needs, it’s beginning to ease the pressure slightly in some of the country’s tightest rental markets.

In fact, investor lending is running above decade-long averages in states like NSW, Queensland, South Australia, Western Australia, and even the Northern Territory.

On the demand side, population growth is slowing a touch, and some renters are adapting by consolidating households — sharing homes, taking on flatmates, or even opting for intergenerational living arrangements to cope with the rising cost of living.

So yes, landlords still hold the upper hand.

But the momentum is shifting.

The pace of rental growth is slowing, and we could be heading toward a period of greater stability in the rental market over the coming months.

About Leanne Jopson Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.