Rents have soared faster than wages over the past five years in every jurisdiction except the one that caps rent increases – but experts agree that’s not the reason behind its modest growth.
Instead, the ACT’s measured rent rises come as more new homes are on offer compared to NSW, Victoria or other states, giving tenants more choice and making it harder for landlords to increase rents.
Rents in NSW have risen 40.9 per cent over the five years to September 2025, Cotality figures show, and 33.6 per cent in Victoria. The nation’s largest spike was WA, up 66 per cent, while Queensland also rose 50.4 per cent.
Over the same time period, wages rose by about 17 to 19 per cent in the same states.
But in the ACT, rents rose 18.5 per cent over five years – not even a percentage point more than wages growth.
Cotality research director Tim Lawless said the overall rapid rent rises in NSW, Victoria and the mid-sized capitals came as the demand for rental properties was outweighing supply.
Households had become smaller since the lockdown years when working from home was widespread, which has only partially reversed, he said. Overseas migration had a strong relationship with rental demand, although he said this has virtually normalised.
“We’re in a housing supply crisis. We’re not building nearly enough homes for population growth and there’s a cumulative effect,” he said.
The ACT, by contrast, has offered a better supply of newly built apartments, he said. This was also evident in the value of apartments for sale, which were hardly moving, he added.
“It looks like the [Canberra] market is a lot more balanced in terms of supply and demand. The ACT hasn’t gone through the same demand-side shocks as mid-sized capitals. Interstate migration and overseas migration hasn’t been as extreme,” he said.
“It’s really kept a lid on value growth and rental growth. It’s a good testament to the positive influence housing supply can have on affordability.”
The ACT in 2019 capped rent increases so landlords could increase rent only by the rate of inflation for Canberra rentals plus 10 per cent.
Lawless did not think the rent caps had limited ACT’s rent growth, as over the 12 months to September, ACT rents rose only 2.8 per cent.
“It’s nowhere near the 10 per cent cap and hasn’t been over the past five years,” he said.
He noted Victorian rents rose only 2 per cent over the 12 months to September, the lowest nationally, despite speculation that the state’s rental reforms would put upward pressure on rents, which “doesn’t seem to be the case so far”.
Centre for Independent Studies chief economist Dr Peter Tulip said the overall increase in rents was due to a tight market and unusually low vacancy rates.
“Given that population growth is expected to outpace construction over the next year or two, the tightness of the rental market, and hence the strong growth in rents, is likely to continue,” he said.
“Over long periods, rents have risen faster in Sydney than in other cities … Sydney has been building houses less quickly than other cities. The Minns government is trying to change that. Renters in Sydney will hope they succeed.”
Rents have risen faster than wages over the past five years.Credit: Chris Hopkins
He said the ACT’s low growth in rents reflected its rapid building. The territory has been approving 11 buildings per 1000 people a year – more than any other jurisdiction and above the national average of eight.
Moreover, the ACT rent cap limits rent increases only for ongoing tenancies, and not for rents advertised to new tenants covered by the Cotality data, he said.
ANU associate professor in the Centre for Social Policy Research Ben Phillips agreed the ACT’s slower rent rises were due to lower population growth and more supply of housing.
“The ACT probably had pretty strong housing supply in recent years so that’s probably changed things a little bit in our favour in the ACT, compared to some other jurisdictions where there’s been stronger population growth and not as strong home building,” he said.
“It’s always good for governments to ensure there’s reasonably strong healthy supply going into the market. That has been a focus of most governments.”
AMP chief economist Dr Shane Oliver attributed rent rises to a shortage of rental accommodation and the ACT situation to its greater supply of property.
“The main driver is the very low vacancy rates we’ve been seeing in Australian capital cities, which has meant landlords are in a strong position to raise their rents in the face of high levels of demand,” he said.
“It’s partly a blowback from poor housing affordability – housing gets expensive, people turn to the rental market – and it partly reflects the surge in underlying population-driven demand.”
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