Australia Rental Crisis: Debt, Affordability & Homeowner Gains

Australia’s rental crisis continues to deepen, with families increasingly forced into debt to cover soaring costs, while property owners are seeing substantial daily profits. Recent data reveals a widening gap between rental affordability and household incomes, particularly impacting those on income support and in regional areas.

Rental Affordability at Record Lows

Rental affordability has “collapsed” across Western Australia, with thousands unable to secure housing on income support, according to reporting from The West Australian. The situation is mirrored nationally, with families increasingly relying on debt to meet rental payments. The Australian Broadcasting Corporation reported that families are going into debt simply to survive as rental costs continue to surge.

Cotality research released in November 2025 showed the cost of a typical Australian home had soared to 8.2 times as much as household incomes – the worst housing affordability on record. Simultaneously, the share of income required to afford rent reached a record high of 33.4 percent. This data, initially reported by the Sydney Morning Herald, underscores the growing strain on household budgets.

Investor Profits Soar as Renters Struggle

While renters face increasing financial hardship, property owners are experiencing significant gains. News.com.au reported that homeowners are currently making an average of $500 per day. This disparity highlights the imbalance in the current housing market, where investors are benefiting from rising property values and rental income while renters struggle to keep up.

Data released in February 2026 by Cotality showed that rents have risen 2.5 times faster than wages over the past five years, placing a significant burden on renters. This trend is further exacerbated by a surge in investor lending, which has increased by 23.6% over the year, as reported by Greens spokesperson for finance, housing and homelessness Senator Barbara Pocock.

“The ABS data shows the biggest winners of Labor’s 5% deposit scheme are property speculators who rushed into the market, certain that the government’s policy was going to push up property prices and they were right.”

Senator Barbara Pocock, Greens spokesperson for finance, housing and homelessness

According to Senator Pocock, the Labor government’s 5% deposit scheme has disproportionately benefited property investors, with $43 billion lent to investors in the first three months of the scheme – more than double the amount allocated to first-home buyers. This influx of investment has contributed to a 31.8% increase in property investor lending over the year.

Regional Areas Hit Hardest

The rental affordability crisis is particularly acute in regional areas. The ABC reported on Amanda Mentiplay, a resident of Norlane, Victoria, whose rent has increased from $350 to $400 per week over the past four years. Ms. Mentiplay fears she may be forced to move further into regional areas, such as Stawell or Horsham, if rents continue to rise.

This situation reflects a broader trend of declining rental affordability in regional parts of Australia, as highlighted by the SGS Economics Rental Affordability Index. While worsening affordability in capital cities appears to have stalled, regional areas are experiencing a further decline in affordability.

Calls for Increased Housing Supply and Tax Reform

Advocates continue to call for increased housing supply to address the crisis. However, experts warn that simply increasing supply may not be enough, particularly given elevated construction costs. Eliza Owen, head of Australian research at Cotality, noted that past government efforts to boost housing construction have not yet fully materialized.

The Greens are advocating for tax reform, including a review of capital gains tax discounts and negative gearing, to address the imbalance in the housing market and prioritize renters and first-home buyers over investors. The current system, they argue, incentivizes investment in property at the expense of affordability for those seeking to secure housing.