How much should I spend on rent

If you're renting a property, you’re likely wondering how much of your income you should spend on rent, while still tucking aside savings for a rainy day (or a house deposit).

Rental costs are still on the rise in many Australian cities. The average house rental cost in Sydney is around $775 per week, more than 40% of the average salary.[1] Seven in 10 renters in Australia are experiencing ‘rental stress’, which is defined as spending more than 30% of your total income on rental costs.[2]

This makes it even more important to be savvy about your rental math. The amount you can afford to spend on rent depends on your personal circumstances, financial situation and goals, and other living costs. Let’s take a look at how to set a rental budget, find affordable housing, and make the numbers work for you.

What percentage of my income should I spend on rent?

If you’re wondering how much to spend on rent, budgeting no more than 30% of your income is a good place to start.

To calculate rent affordability, the Australian Bureau of Statistics divides rental payments by household income.[3] The result is your rent-to-income ratio. Households spending more than 30% of their gross income on rent are likely to be experiencing rental stress.

There are three primary ways to determine how much to spend on rent.

1. Follow the 30% rule

The 30% rule means keeping your rent below 30% of your total income. For a renter in Sydney who is making an average annual salary, that would mean spending approximately $580 per week on rent.

If you’re self-employed or have variable income, use your average weekly income to determine how much you should spend on rent each week.

2. Set a 50/30/20 budget

Another option is to use the 50/30/20 budget system.[4] With this approach, you set aside 50% of your income for your needs, 30% for wants (travel or entertainment, for example) and 20% for savings or other financial goals.

The goal is to keep all of your living expenses (including your rent) under 50% of your income, so it’s about juggling the numbers until they add up. For example, perhaps the rental property you’re considering will cost more than 30% of your income. However, it’s close to public transport, which will allow you to keep your overall living expenses below the 50% target.

3. Think like a property manager

Many property managers use the 30% rule as a starting point when assessing your rental application, but the number of tenants you’re applying with could help shift the numbers in your favour.

For example, if you’re applying to rent a property with co-tenants, your total income will be used to calculate rent affordability, which means that some tenants may pay more or less than 30% of their personal income on rent.

Remember – there are a variety of ways to show a landlord that you’ll be a good tenant. Property managers working for reputable companies look at a number of factors, including:

• Financial stability (proof of savings, reliable income, good credit history)
• Rental history (positive references go a long way)
• Responsibility (someone who will look after the property and pay rent on time)
• Other factors like whether you have a pet and the number of applicants

If you’re interested in a rental property and you feel confident you can afford it, create a winning rental application and provide prospective agents and landlords with all of the information they’ll need to say yes to your application.

How to set a rental budget in five easy steps

Setting a rental budget allows you to make an informed decision about how much rent you can afford. Follow these five steps to create yours.

Step 1: Determine your gross income

First, add up all sources of income you receive each month. This includes your salary or take-home pay, self-employment income, Centrelink benefits such as child support, and any other recurring payments.

Multiple this by .30 to find out how much you can spend on rent each month according to the 30% rule.

For example, if you make $5,000 per month, multiply that by .30. This will give you a budget of $1,500 per month for rent.

Step 2: Calculate your monthly rent

Once you have a rental property in mind, take the weekly rent amount that’s advertised and use it to determine your monthly rent.

You can do this by:

• Dividing the number by seven
• Multiplying it by 365
• And then dividing it by 12

For example, a property with a weekly rent of $580 has a monthly rent of $2,520.33. Divide your rent by your income to find out if it meets the 30% rule.

Step 3: Add up your fixed expenses

Map out your recurring expenses – anything that happens on a regular basis, including grocery spending, car loan repayments, contents insurance, utility bills, and even your gym membership. This way, you’ll have a better idea of your monthly spending commitments and you won’t be caught off-guard, helping to alleviate the feelings of rental stress.

Also, when comparing multiple rental properties, consider what fixed expenses you might need to plan for. A centrally-located unit with amenities including a shared gym may cost more to rent, for example, but you may be able to cut costs by taking public transport and cancelling your gym membership.

Step 4: Account for up-front costs

Next, consider any up-front costs, such as a rental bond and moving costs. While these costs don’t affect your rent-to-income ratio, they can tie up funds or affect your savings.

Step 5: Consider your financial goals

Finally, take your personal finance goals into account. If you’re saving up to buy a property, get married, or start a family, you may want to reduce your housing costs by spending no more than 20% to 25% of your income on rent.

How can I avoid rental stress?

It’s important to understand that anyone can feel rental stress, regardless of your income. We all experience life changes and moments of anxiety. The best way to avoid rental stress, and to navigate it when it happens, is to be prepared.

Here are four ways to avoid housing stress and feel more financially secure.

1. Set a rental budget

Follow the process above and set a rental budget before you start looking for a rental property. That way, you’ll feel confident you’re selecting a rental property you can afford. Adjust your budget any time your personal circumstances change.

2. Split the cost

Living with flatmates can help you reduce rental stress by splitting the cost of rent and utilities with multiple people.

Not keen on living with other people? Make it a short-term plan and focus hard on your savings goals. It’s remarkable how much you can save towards a house deposit, for example, by sharing rent for a year or two. Just make sure that you can count on your flatmates to pay rent on time and cover their share of the bills.

3. Create an emergency fund

If you haven’t already, set some money aside for emergencies. Ideally, you should have at least three months of rent in a savings account. If you lose your job or face an unexpected expense, you’ll be prepared for it. This can go a long way towards relieving the feeling of rental stress.

4. Consider a different suburb

Staying within your rental budget may mean making some tradeoffs, such as moving into a smaller apartment or going without key amenities. Sometimes, all it takes is moving to a different suburb with lower rental costs, where you can maintain the same standard of living with reduced rental stress.

Six tips for finding affordable housing

With average rents going up across Australia, it can be hard to find affordable housing in many capital cities and even smaller towns. Here are six tips for finding an affordable place to live in NSW:

1. Use a rent affordability calculator to find out how much you can afford to pay in rent based on your income and lifestyle.[5]

2. Use the NSW Rent Check tool to help you find the median rent range in your area. Search by postcode to find out what other renters are paying and what you can expect to pay for certain types of properties.

3. Expand your search to include suburbs that are further away from your preferred location, but accessible by public transport.

4. Join online forums or message boards to find flatmates and short-term housing options — just do your homework to make sure they’re legitimate.

5. Time the rental market and plan your move during the winter or another time of year when there’s less competition.

6. Get to know your local real estate agency, who may be able to offer you exclusive previews of rental properties before they hit the market.

Related: Renting a property in NSW FAQs

Average weekly rents in NSW

Here’s an overview of weekly rents, as of 12 February 2025.