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House and unit rents in Sydney are at record highs, new data shows, forcing some tenants to downsize or move further afield to secure affordable accommodation.
The median asking rent for a house in Sydney was $800 a week in the March quarter, up 2.6 per cent or $20 over the past year, the latest Domain Rental Report, released on Thursday, shows.
The asking rent for a typical Sydney unit was $750, up 4.2 per cent or $30 over the year.
The record-high medians were first recorded in the December quarter 2025 and held steady over the three months to March, the report shows.
But a dwelling vacancy rate of just 0.8 per cent for the quarter suggests further rent increases are possible, Dr Nicola Powell, Domain’s chief of research and economics, said.
“We now have record-high rents and a record-low vacancy rate, and what that tells us is there is an extreme mismatch between supply and demand,” she said.
A vacancy rate of about 3 per cent reflects a balance between tenants and landlords.
Powell said the cost of buying property in Sydney was fuelling demand for rentals.
“In a market like Sydney, which is poles apart in price point from other major capitals, high property prices are locking people into renting for much longer periods of time.”
Recent interest rate rises were also affecting some tenants’ ability to purchase a home, she added.
In parts of Sydney, median rents rose over the quarter, the report shows, with unit rents in the city and inner south jumping 5.6 per cent to $950 a week and house rents in the inner west increasing by 4.8 per cent to $1100 a week.
Tenants’ Union of NSW chief executive Leo Patterson Ross said renters were increasingly compromising on size to secure accommodation.
“We’re hearing from more people whose kids are sharing rooms, or who are working from the dining room table because there’s no space for a study,” he said.
Patterson Ross said cheaper rental properties were becoming more expensive as demand at the market’s lower end increased.
Meanwhile, rent increases on tenanted properties were forcing some renters to relocate, Ross said.
“They are either facing quite a big [rent] increase to stay where they are, or they’re having to move away from where they want to be located.
“They’re moving further along the train line, or up or down the coast. Instead of staying in Newcastle, they might go to Maitland.”
Joel Donnelly, 25, and two of his friends faced such a choice in January when their landlord increased the rent for the Sydenham house they were sharing.
Donnelly’s flatmates decided to leave the city.
“I either had to find new people to come into the house, which I thought would be very difficult with the rent increase, or move further out,” Donnelly said.
He moved further out, identifying a house in Arncliffe and teaming up with two strangers from a Facebook flatmates group to rent it.
“For all three of us, it was a case of rent increases forcing us to move to a less convenient area,” he said.
Donnelly, who works two part-time jobs in the city, pays $300 a week for his room in the new house.
While he considers the rent “unreasonable” for an average worker, he said he felt lucky to have secured a property in the current climate.
“Landlords have options, so they are showing bias towards families, for instance, who they know want to rent for the long term.”
He said real estate agents’ behaviour seemed to reflect the current demand for rentals.
“They’re labelling rooms as bedrooms that aren’t proper bedrooms, and if your application is unsuccessful, they won’t even talk to you to explain why.”
AMP chief economist Shane Oliver said Sydney’s rental market was bearing the weight of the city’s broader housing supply crisis.
“For many years, undersupply was felt most in the home-buyer market and led to excessive house prices relative to incomes. But in recent years, it’s also spread to the rental market, and that’s now evident in the low vacancy rate.”
Oliver said Australia was still falling well short of the National Housing Accord target of building 1.2 million new homes by 2030.
“The shortfall has accumulated over the past three years at a rate of about 60,000 homes a year and has now become entrenched. What that does is inflate house prices and force some would-be buyers to continue renting.”
While a slight uptick in housing starts in the December quarter offered some hope that supply would increase this year, Oliver said radical action was required to make a meaningful difference.
“Until we fix the structural undersupply of new homes, rents will remain under significant upwards pressure.”
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