Australia's Rental Costs Hit Record High — What Property Investors Need to Know About Loan Serviceability

Australia's Rental Costs Hit Record High — What Property Investors Need to Know About Loan Serviceability

Australia's rental market has reaccelerated sharply in 2026, with costs to tenants reaching a national record high — a development with direct implications for property investors assessing their investment loan serviceability.

What CoreLogic's April 2026 Data Shows

CoreLogic's latest research confirms that rental growth in Australia has reaccelerated after a brief mid-2025 moderation. Nationally, rental values are now at their highest level on record, driven by persistent housing supply constraints and continued strong demand from population growth and net overseas migration.

Key indicators for April 2026:

• National rental values at record highs
• Rental growth rate has reaccelerated, suggesting the earlier slowdown was temporary
• The gap between renting and owning continues to narrow in some markets, while in others rents provide compelling yields for investors

Why Rising Rents Improve Investment Loan Serviceability

When lenders assess a borrower's capacity to service an investment loan, rental income from the property is a central input. Most lenders apply a standard "rental shading" discount — typically 75% to 80% of market rent — to account for vacancy risk and costs, before including it in the serviceability calculation.

As rents rise, the rental income credit in serviceability calculations improves. This means:

1. Higher borrowing capacity for investors using rental income to offset loan repayments
2. Improved yield ratios that make the investment case more compelling from a credit assessment standpoint
3. Better support for portfolio investors who hold multiple properties — each property's rental income strengthens the overall serviceability position

For self-employed investors or those with non-standard income documentation, strong and rising rental income on existing properties can be the decisive factor in securing approval — particularly through non-bank lenders who take a holistic view of a borrower's income position.

The City Split: Where to Look in 2026

CoreLogic's April 2026 data highlights a clear divergence across Australian capital cities:

For investors, this creates different opportunity profiles by city. In Sydney and Melbourne, moderating purchase prices combined with record rents may improve entry-level yields. In Brisbane, Perth and Adelaide, capital growth remains a primary driver.

Investment Loan Options for Self-Employed Investors

MPFG Capital's investment loan products cover residential, commercial, and mixed-use properties. For self-employed investors, MPFG's Alt Doc lending framework allows income qualification through:

• BAS (Business Activity Statements) — as few as 12 months
• Accountant's letter confirming business income
• Bank statements in lieu of tax returns

Rental income from the subject investment property and existing portfolio holdings can be factored into serviceability calculations across MPFG's product range.

This article is for general information purposes only and does not constitute financial or investment advice. Past rental performance is not a guarantee of future returns. MPFG Capital ACL 553698.