Forecast Rental Growth in Australia: What the Data Says

Forecast Rental Growth in Australia: What the Data Says

Rent growth in Australia is slowing in the official inflation figures but still running hot on new listings, and most forecasters expect it to stay above pre-2020 norms through 2027. The ABS measured rents up 3.6% in the 12 months to August 2026, while advertised rents in the capitals are growing much faster. The gap between those two numbers is the key to reading every forecast you will see, and to putting a sensible rent assumption into your own plan.

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TL;DR

  • CPI rents (all existing leases) rose 3.6% over the year to August 2026. Advertised rents on new listings in the eight capitals are growing around 5.7% a year, according to CBA economists.
  • CBA expects CPI rent inflation to lift to about 4% in 2027, then ease towards 3.5% by the end of 2028. The RBA also expects CPI rents to stay higher over its forecast period.
  • Supply is the swing factor. The 1.2 million homes target is now forecast to be reached in the December quarter of 2030, a quarter later than previously expected.
  • Affordability is a ceiling. Rent under a new lease now takes about a third of median household income, so growth can’t outrun wages forever.
  • For your own plan, model a range of rent growth rates, not one number.

Table of Contents

Two rent numbers, two different stories

Headlines about rent mix up two measures, and they behave differently.

Advertised rents are the asking price on a new listing. They react quickly to vacancy, sentiment and supply shocks.

CPI rents are what the ABS tracks across the whole stock of rentals, including tenants who haven’t had a rise in a year or more. The National Housing Supply and Affordability Council (NHSAC) explains that this index lags market signals because existing leases are only renewed or adjusted periodically.

That lag is why the two figures sit so far apart right now. The ABS says rents were a main contributor to the annual rise in the CPI, with Rents up 3.6%. Meanwhile, a different gauge, Cotality’s Rental Review for Q1 2026, put national dwelling rents 5.7% higher than a year earlier, up from a mid-2025 trough of 3.4%.

If you are a landlord or planning to become one, the advertised figure tells you what a vacant property might fetch today. The CPI figure is closer to what your rent roll will do on average over several years once leases roll over.

Two rent numbers, two different stories — overview diagram

How the CPI rent figure has moved in 2026

The ABS monthly data shows a gentle plateau rather than a surge:

Period Annual rent rise (CPI)
12 months to March 2026 3.7%
12 months to April 2026 3.5%
12 months to August 2026 3.6%, unchanged since May

The ABS has tied rental inflation to low vacancy rates across the capital cities. That is the same driver behind the faster advertised-rent numbers.

What the main forecasters expect

No one can promise a rent figure for 2028, so it helps to compare what credible institutions say and note where they agree.

The RBA: rents stay elevated

In its August 2026 Statement on Monetary Policy, the Reserve Bank expects CPI rents to remain higher over the forecast period, as the strength in advertised rents gradually passes through to the broader stock of rental dwellings. Strong population growth keeps demand rising.

In a September 2026 speech, the RBA also noted that it expects dwelling construction activity to fall a bit going into late 2027 and 2028. Less building means less new supply arriving later, which is a risk for rents rather than a relief. The RBA treats rents and house prices as responding to different channels: rents to supply and population, prices to interest rates and tax settings.

CBA: about 4% in 2027, then easing

CBA economists forecast CPI rent inflation of around 4% in 2027 before easing, to about 3.5% by the end of 2028. Their reasoning: more completions following earlier approvals, plus slower population growth, should gradually narrow the gap between supply and demand. They put the national vacancy rate at around 1.8% now, edging up to about 2% by the end of 2027, still below the 2015 to 2019 average of about 2.8%.

CBA rent inflation and vacancy forecasts

They also expect tax changes affecting investors to show up mostly in lower dwelling prices and higher rental yields, rather than much higher rents. Their eight-capital yield forecast rises from about 3.75% in mid-2026 to about 4.5% by late 2027.

The wild cards in the headlines

Some forecasts you will find in search results are far more dramatic, such as rises of 15% to 30% over two years after budget changes, or a 24% rise in apartment rents between 2025 and 2030 across capital cities. Treat these as scenarios from particular analysts with particular assumptions, not as consensus. The central official forecasts above point to rent growth in the low-to-mid single digits for CPI rents. A 30% two-year jump would need advertised rents to keep running well above current levels and then flow through existing leases quickly, which is not what the lag in the CPI measure suggests.

Why supply is the number to watch

Rents are a supply and demand story, and the supply side keeps shifting.

  • Completions are down. NHSAC’s August 2026 quarterly report shows building completions down 4% over the 12 months to June 2026.
  • The Accord target slipped. The 1.2 million new homes goal under the National Housing Accord is now forecast to be reached in the December quarter of 2030, one quarter later than before. The Council cites softer market sentiment and interest rate pressure, and expects some construction to be deferred.
  • Forecasts can move quickly. The same report says factors such as geopolitical conflict, fuel and commodity prices and supply chain disruption can push construction timelines out by quarters at a time. A static five-year forecast goes stale fast.
  • Listings are thin. Cotality reported rental listings nationally around 18% below their five-year average in April 2026, with Sydney and Melbourne the tightest.

For a deeper look at how these forces play out in prices as well as rents, see our explainer on supply and demand in Australia’s property market.

The ceiling: rents versus incomes

Rent cannot rise faster than household budgets indefinitely. NHSAC reports that rental affordability is at an all-time low, with the share of median household income needed for a new lease reaching 33% by April 2026. Cotality’s figure for the same period was a record 33.1% of gross median household income, up from a low of 26.2% in September 2020.

What happens at that ceiling? Typically tenants share more, move to cheaper areas, delay leaving home or buy sooner if they can. Each of these eases demand at the margin. This is part of why CBA expects growth to cool in 2028 even with supply still tight. It is a reason to be cautious about assuming 5% or more a year for a decade.

How rent forecasts differ by city and property type

National averages hide a lot. Capital cities generally have the tightest vacancy and the fastest advertised growth, while regional markets, units and houses can move on different timelines. A Melbourne forecast will differ from a Perth forecast, and a two-bedroom unit near a university differs from a family house on the fringe.

When you build a plan around one suburb, use the national figures as a sanity check, not as your input. Look at:

  1. The suburb’s vacancy rate over the last 12 to 24 months.
  2. Days on market for rentals and the number of listings compared with a year ago.
  3. Incomes in the area, since rent growth needs wage support to last.
  4. Planned supply nearby: approvals and projects under construction.
  5. The gap between your property’s current rent and comparable advertised rents. That gap is your potential catch-up when a lease ends.

Turning a forecast into a rent assumption for your plan

The practical question for most readers is not what rents will do, but what number to type into a spreadsheet or modelling tool. Here is a sensible approach.

Use three scenarios, not one

A reasonable framework, based on the sources above:

  • Cautious: around 2.5% to 3% a year. This assumes supply improves and affordability limits bite.
  • Base: around 3.5% to 4% a year, in line with CBA’s CPI rent path for 2027 and 2028.
  • Strong: 5% or more for a couple of years, then moderating. This matches the advertised-rent run rate and a prolonged supply shortage.

These are illustrative assumptions drawn from the published forecasts, not predictions. Run all three and see whether your plan still works at the cautious end. If it only works at 5% rent growth, it is too fragile.

Apply rent growth to rent, not to your whole return

Rent growth is one input. Your outcome also depends on purchase price, interest rate, vacancy, management fees, rates, insurance, maintenance and tax. The RBA’s own analysis notes that recent softness in established housing prices reflects both tax policy changes and cash rate increases, which weigh on household wealth even while the structural shortage of homes remains. Rents can rise while prices wobble, and the reverse can also happen. Our guide to modelling the RBA rate outlook shows how a rate move changes repayments for borrowers.

Remember the renter’s side

If you rent, the same forecast tells you what staying put might cost. A 4% annual rise on a $600 weekly rent adds about $24 a week in the first year and compounds from there. Compare that against the cost of buying, or of buying elsewhere while you keep renting. We cover this trade-off in renting vs buying: a wealth comparison for Australians and in our guide on how to grow wealth while renting.

Worked example: 15 years of rent at three growth rates

Take a rent of $600 a week today. Compounded annually, it becomes roughly:

Annual growth Weekly rent after 5 years After 10 years After 15 years
3% $696 $806 $935
4% $730 $888 $1,080
5% $766 $977 $1,247

The gap between 3% and 5% is over $300 a week by year 15. That is why a single rent assumption can make a rentvesting or buying plan look either comfortable or stretched. Long horizons also need caution: the further out, the more the forecasts rest on assumptions that shift, as NHSAC’s note on supply volatility makes clear. Our 15-year property forecast and long-term projections based on ABS data explain how we think about ranges over that horizon.

Run the numbers with WealthStacker

WealthStacker is an investment toolkit built for exactly this kind of question. It offers 15-year modelling that compares rentvesting and buying scenarios, a net worth and goal planner, borrowing power estimates and free automated quarterly property valuations. You can change your rent growth assumption and see how your projected net worth shifts, without building a spreadsheet. Explore WealthStacker or join the waitlist.

If you are considering rentvesting, two of our guides pair well with this one: the deposit strategy for beating APRA’s 3% buffer and renter financial modelling for property investment.

What could change these forecasts

Be ready to revisit your assumption when any of these move:

  • Population growth. The RBA points to strong population growth as a persistent source of rental demand. Slower arrivals would ease pressure, as CBA assumes.
  • Building completions. Watch the NHSAC quarterly reports and ABS building data. Delays push rent pressure further out.
  • Interest rates. Higher rates deter construction and investor purchasing, and can push some would-be buyers into renting.
  • Investor tax settings. CBA expects tax changes to affect prices and yields more than rents, but the RBA says tax policy has influenced the established market.
  • New ABS releases. The ABS publishes the September quarter CPI and monthly indicators on a set calendar. Check the ABS release calendar for dates.

If you are making a large decision, such as a purchase or a loan, speak with a licensed mortgage broker or financial adviser who can look at your own finances. A forecast is an input to that conversation, not a substitute for it.

FAQ

Is rent going to increase in 2026 and 2027?

Yes, on current evidence. ABS data shows CPI rents up 3.6% in the year to August 2026, and CBA expects that to lift to about 4% during 2027 before easing. Advertised rents are growing faster, so new tenants are seeing bigger rises than the average.

Why do advertised rents and CPI rents show different growth?

Advertised rents measure new listings and respond quickly to market conditions. CPI rents measure every rental, including long-standing leases that change slowly. Over time, the CPI figure tends to catch up with what advertised rents were doing earlier.

Could rents fall in Australia?

Nothing in the RBA, CBA or NHSAC outlooks points to falling rents, though growth is expected to ease later. Vacancy is still below its 2015 to 2019 average and listings are thin. A fall would likely need a sharp rise in supply or a drop in population growth, plus pressure from affordability limits.

What rent growth rate should I use when modelling an investment property?

Use a range. Something like 3% for a cautious case, 4% for a base case and 5% for a strong case lets you see how sensitive your plan is. Then check your suburb’s own vacancy and rent history, because the national figure won’t fit every area.

Will more housing supply bring rents down?

It should slow rent growth rather than reverse it. NHSAC’s forecast has the 1.2 million homes target arriving in late 2030, and completions are currently falling. CBA expects supply to gradually narrow the gap, but the easing is gradual.

Sources

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