Renters in Sydney are now spending $1,600 more per year on rent than a year ago as weekly prices hit a new record, according to the latest realestate.com.au Market Insight.
The average rent is $760 per week, after increasing 4.1 percent over the course of 2025, and is expected to continue rising this year.
Sydney remains the most expensive capital city to rent, with an average weekly rent $185 higher than Melbourne.
According to REA Group, renters in Sydney typically pay $9,620 more per year than Melburnians.
Senior economist Anne Flaherty of the REA Group.
REA Group senior economist Anne Flaherty said that while the rent increase was “significant in dollar terms,” the pace of rent growth has been moderate compared to previous years.
“The unfortunate thing is that even a relatively normal growth rate – because rents in Sydney are so high – equates to quite a large dollar increase,” she said.
“It involves an increase in the average rental price of approximately $1,600 per year.”
Ms Flaherty said rental growth, albeit at a slower pace, will continue this year.
“Rents are likely to reach new record highs in 2026,” she said.
Rents in Sydney rose 7.1 per cent annually, more than double that of houses, which rose 3.2 per cent.
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A unit listed for $750 per week in Sydney’s CBD.
The property is located on Kent St.
The average weekly rent for houses in Sydney is now $800, while the median for units rose to $750 per week.
According to Ms Flaherty, rents in Sydney will not reach a price ceiling without “a very significant increase in the supply of rental properties”.
“While we have seen rental market conditions improve a bit, vacancy rates are still quite low across Sydney,” she said.
“And population growth is still a factor, especially international migration.”
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A one bedroom unit in Newtown, inner west Sydney.
The King St unit is offered for $750 per week.
Ms Flaherty said Sydney’s population growth is being driven by new migrants to the country, who are much more likely to rent than own in the first few years of moving to Australia.
“That migration story stimulates the demand for rental properties and at the same time you naturally get people who, due to the costs of housing, are stuck in the rental market for much longer than in the past.
“Even though we are starting to see signs of improvement with the new supply, the rate at which we are building new homes is not really keeping up with what we need in Sydney.”
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This two-bedroom unit is listed for $750 per week in Merrylands, Western Sydney.
The property is located on Gladstone St, Merrylands.
Ms Flaherty said a positive sign for the market is an increase in investor activity.
“As more investors purchase real estate, it actually adds to the supply of rental properties and can help increase vacancy rates,” she says.
“Another interesting thing that could happen is that with the UM Home Guarantee Scheme we may see a greater number of current tenants able to make the transition to first home buyers.
“That could also free up some inventory.”
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This four-bedroom house in Austral, south-west Sydney, is also for sale at $750 per week.
Four-bedroom homes in Austral rent for an average of $770 per week.
In regional NSW, rental prices rose 1.7 per cent in the December quarter, to a weekly price 5.53 per cent higher than a year ago.
With an average weekly rent of $600, it is more expensive to rent in regional NSW than in Melbourne ($575) or Hobart ($573) and just as expensive as to rent in Adelaide ($600).
Ms Flaherty said this regional price growth was driven by Sydney’s unaffordability.
“In the case of regional NSW, we are seeing people who can no longer afford to live in Sydney moving further away from the city and in some cases moving to regional NSW,” she said.
“We’re not seeing enough supply of rental properties in many areas across the region in NSW, which means that when those properties become available, they often see quite a high level of competition, and that’s what has driven rental prices up.”
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This three-bedroom house is listed for $750 per week in Charlestown, near Newcastle.
The average rental price of regional NSW homes has risen to $600 per week.
Ms Flaherty said Newcastle is a good example of a place where Sydneysiders are migrating, with a strong lifestyle and the ability to work remotely.
“Even though we are several years beyond Covid, it has really rewritten the way people can work,” Ms Flaherty said.
“So we have a higher percentage of the population that can work remotely… that could be a driver for increased demand.”
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