Rents, mortgages and housing-cost stress

Renata had rented the same one-bedroom flat in Brisbane's inner south since 2019, and for the first two years the rent barely moved. Then, within eighteen months from late 2021, her landlord raised it three times — the last increase alone adding more than $80 a week — and when her lease came up for renewal in 2024 the agent told her, not unkindly, that the market had simply moved and she could either pay the new figure or leave. She works full-time as a disability support worker, earns above the median wage for her occupation, and still spends more than a third of her take-home pay on rent. She inspected forty listings before finding one she could afford, in a suburb twenty minutes further from her job, with a flatmate she had not met before signing the lease.

A few kilometres away, a young family who bought their first home in 2021, when the Reserve Bank's cash rate sat at a record-low 0.10%, watched their monthly mortgage repayment climb by well over a thousand dollars as the cash rate rose thirteen times to 4.35% by late 2023 (RBA, cash rate decisions, 2022–2023). Renata and that family sit on opposite sides of Australia's housing market — one renting, one servicing a mortgage — but they are being squeezed by the same three forces at once: a housing supply that did not keep pace with a rapidly growing population, a record surge in net overseas migration as the borders reopened, and the sharpest run of interest-rate rises in a generation. Housing costs — not petrol, not groceries, not power bills — are the single largest item pushing most Australian households into genuine financial stress, and they are the clearest bridge between the cost-of-living crisis this site documents and the migration and supply failures documented under Housing & Migration.

What the government did

No single agency controls "housing costs" the way a minister controls a tax rate. Three separate levers, held by three different institutions, combine to determine what a renter pays and what a mortgage holder owes: the pace of population growth, which is a federal migration-policy setting; the supply of new homes, which is mostly a state and local planning function that the federal government can fund but not force; and the price of credit, which is set independently by the Reserve Bank of Australia (RBA) and is not a lever any elected government pulls directly. The federal government's housing-cost record has to be read across all three.

Migration settings

Australia's international borders were effectively closed for close to two years during the pandemic, and net overseas migration (NOM, the difference between people arriving to live in Australia for 12 months or more and people leaving) fell close to zero, and briefly negative, in 2020–21 (ABS, Overseas Migration, approx.). When borders reopened in 2022, the government did not slow the rebound — it kept permanent migration planning levels elevated and placed no effective near-term cap on the temporary skilled, student and working-holiday visa categories that make up most of the actual population inflow. NOM rebounded sharply and, on the ABS's own figures, exceeded 500,000 in a single financial year as the post-border catch-up peaked (ABS, Overseas Migration, 2022–23 financial year, approx.). In December 2023 the government released a Migration Strategy promising to roughly halve the migration rate over subsequent years and to rein in the fastest-growing visa categories, particularly international students, but the numbers took time to respond, and a subsequent attempt to legislate a national cap on international student enrolments was contested in the Senate and did not pass in its original form (Australian Government, Migration Strategy, Dec-2023, approx.).

Housing supply commitments

On the supply side, the government's central commitment is the National Housing Accord, agreed with the states, territories, superannuation funds and the construction industry in 2022 and backed by the Housing Australia Future Fund (HAFF), legislated in 2023: a target of 1.2 million new, well-located homes to be built nationally between mid-2024 and mid-2029, alongside a $10 billion perpetual investment fund whose earnings — not its capital — help fund an additional 30,000 social and affordable homes over that period (Australian Government, National Housing Accord; Housing Australia Future Fund Act 2023, approx.). This target and its funding mechanism are examined in full under Help to Buy, the HAFF and the supply-side gap; the point for this topic is that the target was set after the migration rebound was already under way, and its delivery depends on state planning approvals, a construction sector labouring under high material and labour costs, and a target completion rate — averaging roughly 240,000 dwellings a year — that Australia has not achieved in any year on record (National Housing Accord, approx.).

Part of that shortfall sits with the construction sector itself, not with any single policy lever. Builder and trade insolvencies rose sharply through 2023 and into 2024, as fixed-price contracts signed before the pandemic's material and labour cost spike came due, leaving some partly built homes in limbo and pushing several mid-sized volume builders into administration (ASIC, insolvency statistics, approx.). Skilled-trade shortages compounded the problem: the same migration settings that added record numbers of renters to the market also, in principle, added tradespeople to the workforce that could build for them, but building approvals and completions data show that extra capacity did not arrive fast enough to offset the extra demand in the years that mattered most (ABS, Building Activity, approx.). None of this absolves the supply-side response of the pace criticism made later in this topic — but it is a genuine, largely apolitical constraint that would have slowed any government's housing target, whichever party set it.

Rental and interest-rate settings

The government does not set rents and does not set the cash rate. It increased Commonwealth Rent Assistance twice — by 15% in the May 2023 Budget and a further 10% in the May 2024 Budget, examined in full under Anatomy of the cost-of-living crisis — which raised the payment for renters who receive it but did not touch the price a landlord charges. On interest rates, the RBA, operating independently of the elected government by design and by statute, raised the cash rate thirteen times between May 2022 and November 2023, from 0.10% to 4.35%, in response to inflation that peaked at 7.8% in December 2022 (RBA, cash rate decisions, 2022–2023; ABS CPI, Dec-2022). The government's own fiscal stance while that tightening cycle ran is examined under Inflation, the RBA and the fifteen rate rises; this topic's focus is what those rate rises did once they landed on renters and mortgage holders, set out in the evidence below.

The evidence: how severe the stress actually is

The numbers behind Renata's rent rise and the young family's mortgage repayment are not anecdotal. They show up, consistently, across every independent dataset that tracks the cost of housing in Australia: the advertised rent a new tenant is quoted, the share of homes standing empty and available, the share of income a household hands over for shelter, and the share of borrowers struggling to meet a mortgage repayment.

Advertised rents and vacancy rates

Advertised rents — the rent a landlord asks for a property currently on the market, tracked separately from the rent paid on existing, ongoing leases — rose roughly 30–40% nationally between their pandemic-era trough in early-to-mid 2021 and 2024–25, on CoreLogic's national rental index (CoreLogic, Quarterly Rental Review, approx.). The ABS's own rents component of the Consumer Price Index, which captures the whole stock of rented dwellings rather than only new listings and therefore moves more slowly, rose at its fastest annual pace in well over a decade through 2023 and 2024, before easing slightly into 2025 as new listings growth caught up in some cities (ABS, Consumer Price Index, Australia, rents series, approx.). The two series measure different things — CPI rents reflect a lagging average across all tenancies; CoreLogic's advertised rent index shows the price actually facing anyone forced to move — which is why the CPI number understates what a household like Renata's experiences the moment its own lease comes up for renewal.

Behind that price rise sits a vacancy rate that fell to levels not seen in decades. SQM Research's national vacancy rate — the share of total private rental stock sitting empty and available to rent — fell to around 1% nationally through 2023 and into 2024, with several capital cities, including Perth and Adelaide, recording vacancy rates near or below 0.5% at points in that period (SQM Research, Vacancy Rates, approx.). A functioning rental market is usually considered to need a vacancy rate of roughly 2–3% to give tenants genuine choice and bargaining power; at 1% or below, a tenant facing a lease renewal has next to no leverage, because there is almost nowhere else to go. That is the market Renata was competing in when she inspected forty listings for one flat she could afford.

Rental stress: the share of income going to rent

Housing economists generally define "rental stress" as a low-income household spending more than 30% of its gross income on rent — a threshold used by the Australian Institute of Health and Welfare (AIHW) and widely adopted across the sector. On AIHW's tracking, roughly two in five low-income renter households were in rental stress by this measure through the most recent data available, and the proportion has been on a rising trend since the pandemic (AIHW, Housing Affordability data, approx.). Anglicare Australia's annual Rental Affordability Snapshot, which checks how many advertised rental listings nationally are affordable and appropriate for a person on the JobSeeker payment or the minimum wage, has for several consecutive years found affordable options in the low single digits of a percentage point of listings, and in some snapshot years effectively none at all for a single person on JobSeeker (Anglicare Australia, Rental Affordability Snapshot, various years, approx.). These are not marginal, edge-of-the-market findings. They describe a rental market that has stopped functioning as a viable option for a large share of low- and even middle-income Australians, not only the most disadvantaged.

Not just the capital cities

The pressure examined so far is often reported as a capital-city story, but it did not stay there. Regional rental markets, many of which absorbed a wave of remote-working city movers during the pandemic and then a second wave of people priced out of capital-city rents afterwards, recorded some of the sharpest percentage rent increases in the country through 2022 and 2023, and several regional vacancy rates fell as low as, or lower than, their capital-city equivalents over the same period (CoreLogic; SQM Research, regional series, approx.). Outer-suburban renters and mortgage holders carry a second, compounding cost: longer commutes to the jobs and services concentrated closer to city centres, which adds fuel and time costs on top of the housing-cost pressure examined here. Housing-cost stress is not an inner-city phenomenon happening somewhere else. On this evidence, it is a national one, distributed unevenly but felt in almost every part of the country.

Mortgage serviceability

On the ownership side, the relevant regulator is the Australian Prudential Regulation Authority (APRA), which requires banks to test whether a new borrower could still service a loan if interest rates rose by a serviceability buffer of 3 percentage points above the loan's actual rate — a standard tightened from 2.5 to 3 points from late 2021, shortly before the RBA's tightening cycle began (APRA, ADI lending standards guidance, Oct-2021, approx.). That buffer is a large part of why most existing mortgage holders did not default outright once rates rose: the system was built, deliberately, to absorb a shock of roughly this size. But "not defaulting" and "not under stress" are different things. The RBA's own Financial Stability Review has tracked a rising share of variable-rate owner-occupier borrowers with little to no spare cash left each month once minimum living costs and mortgage repayments are covered — a share that climbed through 2023 and 2024 as the full run of rate rises flowed through to borrowers on both new and existing loans (RBA, Financial Stability Review, 2023–2024, approx.). Mortgage arrears (loan repayments more than 90 days overdue) also rose from their historic pandemic-era lows over the same period, though they remained well below the peaks seen during the early-1990s and post-2008 downturns, in large part because unemployment stayed low and many borrowers had built up mortgage-offset buffers during the low-rate years (RBA, Financial Stability Review, approx.). The system absorbed the shock without a wave of forced sales — but it absorbed it by squeezing household spending on everything else, which is exactly the mechanism a rate rise is designed to work through, and exactly why cost-of-living pressure and mortgage-rate pressure are, for a large share of households, the same pressure wearing two names.

A vacancy rate near 1% is not a tight market. It is a market with almost no seats left when the music stops.

The migration–rates bridge

The reason this topic sits between Cost of Living and Housing & Migration is arithmetic, not politics. Net overseas migration exceeded 500,000 in the 2022–23 financial year, against annual dwelling completions that have run at roughly 170,000–180,000 homes a year in recent years — well short of the roughly 240,000 a year the National Housing Accord's own target implies is needed (ABS, Overseas Migration and Building Activity, Australia, approx.). Even allowing for average household size, that gap between new people and new dwellings does not close; it compounds year on year, and a market compounding a shortage is a market where rents rise and vacancy rates fall almost by definition, independent of anything a landlord or a tenant does individually. At the same time, the RBA's rate rises pushed up the cost of the debt landlords use to hold investment properties, and Australia's tax settings allow a landlord running an investment property at a loss to offset that loss against other income (negative gearing, examined in full under The Greens' Agenda) — which cushions the landlord's cash flow but does nothing to increase the number of homes available, and gives a highly leveraged landlord facing a higher mortgage repayment every reason to test whether the market will bear a higher rent. Renters, in short, have been squeezed from two directions that trace back to two different federal policy settings — a migration rate that added demand faster than supply could respond, and a rate-rise cycle that raised the cost of the debt behind a large share of the rental stock — while carrying almost none of the bargaining power a healthier vacancy rate would have given them.

The critique: the biggest driver of the squeeze, and the least acknowledged

Housing is not one line item among several in a cost-of-living crisis; on the ABS's own basket weights, it is the single largest, at 21.4% of average household spending, ahead of food (Anatomy of the cost-of-living crisis has the full breakdown; ABS, Annual Weight Update, 2025, approx.). Every other pressure examined elsewhere on this site — the $275 energy promise, grocery inflation, the productivity slowdown — sits on top of a housing-cost base that has risen faster, for longer, and with less realistic prospect of near-term relief than any of them. That alone would justify treating rents and mortgage serviceability as the anchor issue of the cost-of-living crisis. What makes it more serious is that the two policy settings most directly within the federal government's control — how fast the population grows, and how much housing supply is unlocked to meet it — moved in the wrong relative direction for renters at exactly the same time.

The government's own Migration Strategy, released in December 2023, effectively conceded this: it promised to more than halve the annual migration rate and specifically to rein in international-student and other temporary-visa growth, an implicit admission that the settings in place through 2022 and 2023 had run ahead of what the housing market — and, in the strategy's own language, infrastructure and services more broadly — could absorb (Australian Government, Migration Strategy, Dec-2023, approx.). But a strategy released in December 2023 could not undo the two years of accumulated shortfall that preceded it, and a subsequent attempt to legislate a hard national cap on international student enrolments stalled in the Senate through 2024, leaving the government reliant on slower, less certain administrative levers — visa processing settings and financial-capacity requirements — to bring the numbers down (examined in full under International students and the rental frontline). The lag between recognising the problem and having a tool that actually bites on it is, on the evidence above, measured in years, and renters like Renata absorbed the difference in real time, one lease renewal at a time.

Migration moved first because Canberra controls it directly. Supply moved second because Canberra can only ask for it.

On supply, the National Housing Accord's 1.2 million target and the Housing Australia Future Fund are the government's flagship response, but both are structured in ways that limit how quickly they can move the vacancy rate examined above. The HAFF is an off-budget investment vehicle that spends only its annual earnings, capped at $500 million a year, not its $10 billion in capital — a structure examined in full under Help to Buy, the HAFF and the supply-side gap — which means its contribution to the housing stock arrives on a multi-year drip rather than as a lump-sum injection sized to the scale of the shortfall documented here. And because most planning and zoning approvals sit with state and local governments, not Canberra, the federal government's fastest lever is financial incentive, not direct construction — one reason national completions have not yet reached the roughly 240,000-a-year pace the Accord's own target implies is required, more than a year into the target period (National Housing Accord, approx.). A demand-side setting — migration — that the federal government controls directly moved first and fastest; a supply-side setting — construction — that it can only try to incentivise moved second and slower. That sequencing, more than any single number in this topic, is the critique.

The RBA sits outside this critique in one respect and inside it in another. Its independence from the elected government is a design feature this site treats as legitimate, examined in full under Inflation, the RBA and the fifteen rate rises — the government does not set the cash rate and should not. But the RBA's own commentary through the tightening cycle repeatedly flagged that a fiscal policy working in the same direction as monetary policy — restrained spending, timed relief, no measures that added directly to demand — would let inflation, and therefore rates, come down faster and with less pain (RBA statements, 2022–2024, approx.). A government that keeps migration settings elevated, on the population side, while inflation is running at a three-decade high adds to the same demand-side pressure the RBA is simultaneously trying to remove through higher rates — not through any single decision, but through the combined effect of more people needing housing, more people competing for the same rental stock, and a central bank raising the price of the debt behind that same stock, all at once. None of this required bad faith on the government's part. It required only that migration, housing supply and monetary policy be managed by three different institutions on three different clocks, while a citizen renting a one-bedroom flat in Brisbane can do nothing about any of the three.

There is a final compounding effect worth naming precisely, because it is what turns a rental-market problem into a whole-of-life problem. Every year a prospective first-home buyer spends paying rent that has risen 30–40% is a year in which the deposit they are trying to save is being eroded from both directions — by dwelling prices that have kept rising, examined in full under The housing affordability emergency, and by the higher share of income rent itself now consumes, leaving less left over to save at all. Mortgage serviceability, examined above, describes the households that already own a home; it says nothing about the growing number of households the current settings are preventing from ever reaching that point. The rental-stress evidence in this topic and the affordability-emergency evidence next door are, in that sense, the same shortfall measured at two different stages of the same person's life.

What the government got right — and the honest limits

Credit is due in three places. First, the National Housing Accord is the first time in decades that every state and territory, the federal government, superannuation funds and the construction industry have signed onto a single, numeric national housing target, and the Housing Australia Future Fund is a genuinely new, perpetual funding vehicle for social and affordable housing rather than a one-off grant round that ends when the money runs out — the structural criticism this site makes of the HAFF's pace (examined under Help to Buy, the HAFF and the supply-side gap) does not mean the vehicle itself was the wrong instrument, only that its scale and drawdown rate have not matched the urgency of the shortfall. Second, the two increases to Commonwealth Rent Assistance — 15% in May 2023 and a further 10% in May 2024, the first back-to-back increase to the payment in more than three decades — are real, permanent, checkable relief for the renters who receive it, even though this topic's evidence shows they have not kept pace with rent growth of 30–40% over a similar period (DSS, Sep-2024, approx.; CoreLogic, approx.). Third, the government's own December 2023 Migration Strategy was a genuine, public acknowledgement that migration settings needed to come down, made well before it was politically comfortable to say so, even if the legislative tools to enforce it moved more slowly than the strategy itself.

The honest limits sit alongside that credit. A structural housing shortage decades in the making, as the steel-man above correctly states, is not something any single government — this one or its predecessor — could have fixed within a term or two; most of the approvals pipeline sits with the states, examined in full under The States, and construction-sector capacity constraints and insolvencies are a national, not a partisan, problem. The post-pandemic shift in household formation — smaller households, more people living alone — is a real demographic change, documented in ABS Census and household-size data, not a policy artefact, and it would have added pressure to rents and vacancy rates under any government of either major party. What can be fairly weighed is sequencing and scale: whether the government's migration settings, once the border reopened, were calibrated to a housing market it already knew was undersupplied, and whether the supply-side response arrived at a pace and scale that matched the demand-side settings it was simultaneously running. On the evidence assembled in this topic, the answer to both is that the mismatch was significant, and it landed hardest on exactly the households — like Renata's — with the least capacity to absorb it.

Renata's lease is up again next year, and she does not expect the market to hand her much room to negotiate. The young family down the road has stopped watching the RBA's monthly decision with quite the same dread, now that the cash rate has held steady for a stretch — but their monthly repayment has not fallen, and will not, unless and until the Board decides inflation, much of it still driven by the housing costs examined in this topic, has been beaten. Both are waiting on the same three things to move in their favour: more homes built, a migration rate matched to the capacity to house it, and interest rates that reflect an economy no longer straining against a supply shortfall it saw coming. None of the three moves quickly. All three are squarely within the reach of policy — federal, state, and monetary — to get right from here.