Key takeaways
National vacancy rates fell to a record low of 0.7% in March 2026, yet rent growth has stalled or become uneven across several cities, confirming that affordability is now the key constraint in the market.
Sydney rents have plateaued at record highs, with house rents flat at $800 and unit rents at $750 for two consecutive quarters - the first time this has happened in five years.
Perth recorded the strongest quarterly growth of any capital, with house rents up 5.7% and unit rents up 5.3% in the March quarter alone.
Brisbane and Adelaide both reached new rental records, while Melbourne's recovery remains uneven and slightly below its December 2024 peak.
Renters are seeking cheaper alternatives, sharing homes more often, and becoming slower to commit when rents outpace their incomes - even in very tight markets.
For investors, rental growth is becoming more selective.
Properties in higher-income locations with genuine tenant appeal will continue to perform, while average properties in price-sensitive areas face more headwinds.
The structural supply shortage hasn't gone away, but the rapid rental growth of recent years is unlikely to continue at the same pace while affordability remains stretched.
Tight rental markets don't automatically mean rising rents forever - and that's exactly what we're seeing play out right now across Australia.
The Domain Rental Report - March 2026 shows national vacancy rates have fallen to a record low of 0.7%, yet rent growth has stalled in several cities.
The reason comes down to one word: affordability.
Despite the March quarter typically delivering strong rental growth, shows renters can no longer absorb higher rents.
What the Data Actually Shows
Domain's March 2026 Rental Report covers the quarter that typically delivers the strongest rental growth of the year.
This time around, the results were uneven at best.
Sydney house rents held flat at $800 per week for the second consecutive quarter, while unit rents stayed at $750. It's the first time in five years that rents have stalled across multiple quarters in Sydney, despite some of the tightest supply conditions on record.
Melbourne's recovery remains patchy, with house rents sitting $5 below their December 2024 peak.
Brisbane and Adelaide both recorded new highs, with houses reaching $680 and $640 per week respectively.
Perth was the standout performer, with house rents jumping 5.7% in the quarter alone to reach $740 per week.
Table 1: House rents, quarterly and annual changes
| HOUSES | MEDIAN RENTAL ASKING PRICE | ||||||
| Capital City | Mar-26 | Dec-25 | Mar-25 | Quarterly change | Annual change | Status |
| Sydney | $800 | $800 | $780 | 0.0% | 2.6% | Record (steady) |
| Melbourne | $590 | $580 | $590 | 1.7% | 0.0% | $5 below record last seen in Dec-24 |
| Brisbane | $680 | $670 | $650 | 1.5% | 4.6% | Record (new) |
| Adelaide | $640 | $625 | $615 | 2.4% | 4.1% | Record (new) |
| Perth | $740 | $700 | $690 | 5.7% | 7.2% | Record (new) |
| Canberra | $700 | $700 | $690 | 0.0% | 1.4% | Record (steady) |
| Darwin | $720 | $700 | $700 | 2.9% | 2.9% | Record (new) |
| Hobart | $620 | $600 | $575 | 3.3% | 7.8% | Record (new) |
| Combined Capitals | $680 | $665 | $650 | 2.3% | 4.6% | Record (new) |
Source: Domain Rental Report - March 2026
The unit market tells a similar story.
Melbourne units reached a new record of $600 per week, up 4.3% for the quarter.
Adelaide units recorded the strongest annual growth among segments nationally, up 10% to $550. But Sydney units, like houses, went nowhere.
Table 2: Unit rents, quarterly and annual changes
| UNITS | MEDIAN RENTAL ASKING PRICE | ||||||
| Capital City | Mar-26 | Dec-25 | Mar-25 | Quarterly change | Annual change | Status |
| Sydney | $750 | $750 | $720 | 0.0% | 4.2% | Record (steady) |
| Melbourne | $600 | $575 | $575 | 4.3% | 4.3% | Record (new) |
| Brisbane | $660 | $650 | $620 | 1.5% | 6.5% | Record (new) |
| Adelaide | $550 | $530 | $500 | 3.8% | 10.0% | Record (new) |
| Perth | $695 | $660 | $650 | 5.3% | 6.9% | Record (new) |
| Canberra | $580 | $580 | $560 | 0.0% | 3.6% | Record (steady) |
| Darwin | $600 | $600 | $550 | 0.0% | 9.1% | Record (steady) |
| Hobart | $500 | $480 | $480 | 4.2% | 4.2% | Record (new) |
| Combined Capitals | $675 | $650 | $650 | 3.8% | 3.8% | Record (new) |
Source: Domain Rental Report - March 2026
Supply remains severely constrained, and competition remains fierce, but tight conditions alone are no longer enough to push rents higher across the board.
Instead, the market has entered a new phase - one where renters’ budgets, not just the lack of available homes, are determining outcomes and increasingly shaping major life decisions, particularly for younger Australians deciding when to move out of home and where they can afford to live.
Three months ago, Domain’s Chief Residential Economist, Dr Nicola Powell warned that renters were running out of capacity to absorb higher rents.
"Even during the usually stronger March quarter, this month’s data shows that the affordability ceiling has now been reached,” said Powell
She further said:
“Vacancy rates are lower than ever, and supply remains incredibly tight, but rent growth is no longer accelerating everywhere. That tells us households simply can’t stretch any further.
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In many cities, we’re seeing rents hold flat or rise unevenly despite worsening shortages. Affordability, not demand, is now the key constraint.”
Domain’s report shows the focus of the national conversation has shifted from how tight the rental market is to how much more renters can realistically pay.
Dr Powell explains:
“Rental conditions still favour landlords due to the lack of supply, but the pace of growth is not being sustained at high levels.
This isn’t because conditions have eased, but because renters have hit their limits.”
Table 3: House and unit combined rental vacancy rates
| HOUSE AND UNIT COMBINED | RENTAL VACANCY RATES | |||||
| Capital City | Mar-26 | Dec-25 | Mar-25 | Quarterly percentage point change | Annual percentage point change |
| Sydney | 0.8% | 1.4% | 0.9% | -0.6 ppt | -0.1 ppt |
| Melbourne | 1.0% | 1.6% | 1.2% | -0.6 ppt | -0.2 ppt |
| Brisbane | 0.6% | 0.9% | 0.8% | -0.3 ppt | -0.2 ppt |
| Perth | 0.3% | 0.5% | 0.4% | -0.2 ppt | -0.1 ppt |
| Adelaide | 0.4% | 0.6% | 0.4% | -0.2 ppt | 0.0 ppt |
| Hobart | 0.2% | 0.3% | 0.4% | -0.1 ppt | -0.2 ppt |
| Canberra | 0.8% | 1.5% | 1.2% | -0.7 ppt | -0.4 ppt |
| Darwin | 0.2% | 0.7% | 0.6% | -0.5 ppt | -0.4 ppt |
| Combined Capitals | 0.7% | 1.2% | 0.9% | -0.5 ppt | -0.2 ppt |
| Combined Regionals | 0.7% | 0.9% | 0.7% | -0.2 ppt | 0.0 ppt |
| National | 0.7% | 1.1% | 0.8% | -0.4 ppt | -0.1 ppt |
Source: Domain Rental Report - March 2026
What This Means if You're an Investor
This is an important moment for investors to recalibrate their thinking, and it doesn't change the fundamental case for well-located residential property.
What it changes is the assumption that rental income will automatically keep climbing just because vacancy rates are low.
We're entering a phase where rental growth will be more selective - determined by location, property type, and the income profile of the local renter pool.
Properties in inner and middle-ring suburbs, where renters tend to have higher incomes and greater capacity to absorb cost increases, are likely to hold up better than those in more price-sensitive outer areas.
Well-maintained properties that offer genuine value relative to alternatives will continue to attract quality tenants and sustain rents, while average properties in oversupplied pockets will feel the pressure.
The other implication worth noting is that units are playing an increasing role as renters trade down in search of affordability.
In some cities, that's already showing up in stronger unit rent growth relative to houses. For investors who've historically focused on houses only, this is worth watching.
Looking Ahead
The structural story hasn't changed.
Australia is not building enough homes to meet demand, and the pipeline of new supply remains well below what's needed to meaningfully ease pressure on the rental market.
These conditions don't resolve quickly.
But the pace of rental growth we saw between 2022 and 2024 is unlikely to repeat in the near term. The market has entered a more measured phase, where affordability is acting as a genuine ceiling on how far rents can move, regardless of how tight supply gets.
For investors, the practical takeaway is this - rental yield and vacancy rates are useful signals, but they're only part of the picture.
Understanding the income capacity of your likely tenant base, and whether that capacity is growing or shrinking, is just as important when assessing a property's long-term rental performance.
