The research, which uses the standard affordability benchmark that rent shouldn’t exceed 30 per cent of pre-tax income, shows the required income to rent a median-priced house across combined capitals has jumped 51 per cent since 2019, rising from $74,533 to $112,667.
Sydney remains Australia’s most expensive rental market, requiring a household income of $135,200 to comfortably afford a typical house.
Sydney renters are currently allocating the largest portion of their income to landlords at 24.5 per cent of their pre-tax earnings.
Domain’s Senior Economist Dr Joel Bowman said renting is getting tougher.
“A household needs to earn almost $113,000 to rent a typical capital-city house today,” Dr Bowman said.
“With individual earnings sitting around $80,200 on average, this puts enormous pressure on single-income renters and shuts many average earners out of most inner and middle-ring suburbs entirely.”
The research identified affordable “sweet spots” typically located 30-40 kilometres from city centres, where households earning between $69,000 and $85,000 can still secure rental housing.
These areas include Melton in Melbourne’s west, Willmot in Sydney’s outer west, and Russell Island in Brisbane’s bayside region.
The income gap between renting a house versus a unit varies significantly across cities. In Darwin, households need an additional $24,300 annually to upgrade from a unit to a house, while similar premiums exist in Canberra ($20,800), Perth ($17,333) and Adelaide ($17,334).
Interestingly, Sydney and Melbourne show narrower price gaps between houses and units. Sydney’s difference is just $5,200, while Melbourne’s gap is a mere $900.
This trend reflects the growing availability of modern, high-quality units that are increasingly popular with mid-to-high-income renters.
Australia’s most expensive rental suburbs remain concentrated in Sydney’s east and north shore.
Vaucluse tops the list, requiring an extraordinary income of $511,333 – more than seven times what’s needed in the most affordable suburbs.
The affordability divide between cities continues to evolve.
While Sydney maintains its position as the least affordable market, the gap between Sydney and cities like Brisbane, Adelaide and Perth is narrowing as 2026 approaches.
For single-income households, the rental market presents particular challenges.
With individual average annual earnings sitting around $80,200, many single renters are effectively priced out of inner and middle-ring suburbs entirely.
Dr Bowman said the rental market remains challenging despite some positive indicators.
“While it’s encouraging that no capital cities are officially under rental stress, the reality is the market remains incredibly tough heading into 2026,” Dr Bowman said.
“Rents are still rising faster than wages, vacancy rates are at record lows, and as the analysis shows, the gap is widening between where renters want to live, and what they can actually afford.”
