Australia's rental affordability declined over the past year to reach its lowest level since at least 2008, when records began, said REA Group in a Monday report.

Rent price growth of 5% over the December quarter of 2025 offsets income growth in Australia, further deteriorating affordability, while households earning the median income of AU$124,000 could afford just 37% of rentals advertised from July to December 2025, a new low.

New South Wales remains the least affordable state for renters, followed by South Australia, where typical income households could afford just 25% and 19% of rentals, respectively.

Victoria was the only state to see rental affordability improve over the past 12 months, holding its place as the most affordable state for renters by a wide margin.

According to the report, for lower-income households earning just under AU$75,000 per year, only 2% of rentals advertised from July to December 2025 were considered affordable.

Despite the tough conditions, rental availability appears to have improved over 2025 in most capitals, and rent growth, while still solid, slowed compared with 2022 and 2023, the report added.