Knight Frank’s, Prime Global Rental Index for Q2 2025 reveals Sydney’s luxury rental prices have surged by 43.1 per cent since mid-2020, placing it behind only Miami (61 per cent) and New York (46.7 per cent) in the global rankings.
Melbourne also performed strongly in the international comparison, securing sixth place with a five-year growth rate of 39.7 per cent in the luxury rental sector.
The global luxury rental market is showing signs of renewed strength after experiencing a slowdown last year. Across Knight Frank’s 16-city index, average annual rental growth increased to 3.5 per cent in Q2 2025, up from 3 per cent in the previous quarter.
Over the past 12 months, Melbourne recorded luxury residential rental growth of 3.4 per cent, ranking ninth globally, while Sydney saw more modest growth of 2 per cent, placing it twelfth among the cities tracked.
Asian markets led the annual growth figures, with Hong Kong and Tokyo experiencing increases of 8.6 per cent and 8.3 per cent respectively in their luxury rental sectors.
Knight Frank’s Global Head of Research Liam Bailey noted that while current growth in Australian cities has moderated, their long-term performance remains impressive.
“However, these cities have seen some of the strongest growth globally over the past five years, outperforming many other cities around the globe,” Mr Bailey said.
He said that economic factors are currently tempering growth in prime rental markets worldwide, but underlying fundamentals remain strong.
“Elevated interest rates and persistent inflation are tempering prime rental growth in major cities, as affordability constraints curb tenants’ ability to bid up rents. However, strong immigration underpins growth, and demand – set against limited new supply – will push rents towards long-term trend rates,” he said.
The outlook varies across global markets, with North American luxury hubs expected to maintain stronger growth than their European counterparts.
“New York and Miami are expected to sustain mid-single-digit gains, while Hong Kong and Tokyo face moderation amid regulatory headwinds. European hubs such as Berlin and London should see tight new supply delivery support low- to mid-single-digit growth,” Mr Bailey said.
In Australia, industry experts point to ongoing supply constraints as a key factor supporting the luxury rental market despite the moderation in growth rates.
McGrath’s General Manager of Franchise Property Management Jess Alvial highlighted the continued strength in the premium segment despite slowing growth.
“Growth in Sydney and Melbourne’s luxury rental markets may have eased but with five-year gains above 40 per cent, prestige demand remains very healthy and supply remains scarce,” Ms Alvial said.
She said that the ultra-premium segment of Sydney’s market continues to command extraordinary rental prices, reflecting the city’s global appeal.
“Sydney’s ultra-premium homes still command eye-watering rents up to $25,000 a week, reflecting enduring global demand despite moderating growth,” she said.
