Australia’s rental market is whipsawing between moments of modest relief and persistent tightness, with fresh PropTrackdata showing only limited breathing room for tenants.
The national rental vacancy rate increased by 0.19 percentage points in January to reach 1.48%, the highest level since February 2022. Despite this, the current rate is still 0.85 percentage points lower than five years ago, underscoring how constrained conditions remain.
Capital city markets led the shift. Vacancy in capital city areas rose to 1.51% over January, slightly above the regional rate of 1.40%. Among the capitals, Hobart recorded the largest monthly jump in vacancy, up 0.36 percentage points, yet remains the tightest market at just 0.72%. Perth and Brisbane followed as the next-tightest markets, with vacancies at 1.11% and 1.13%, respectively.
At the other end of the spectrum, Melbourne had the highest vacancy rate of any capital city in January at 1.81%, after a 0.22 percentage point rise, followed by Darwin at 1.76% and the ACT at 1.59%. Sydney’s vacancy rate increased by just 0.10 percentage points to 1.55%, signalling only modest relief in the nation’s largest city.
“Conditions for renters have improved over the past three months, though they remain largely unchanged from a year ago. They are significantly below the conditions renters faced during the pandemic five years ago when the national vacancy rate was sitting at 2.3%,” Anne Flaherty (pictured), senior economist at REA Group, said.
Following the Reserve Bank’s rapid hiking cycle through 2022 and 2023, higher mortgage rates and tighter serviceability appear to have kept more would‑be buyers in the rental market for longer, limiting any lasting easing in 2026.
Separate January figures from SQM Research show a national residential vacancy rate of 1.2%, with total vacancies slipping to 37,630 dwellings as the usual post‑holiday lift in listings is quickly absorbed. Most capital cities remain highly constrained, particularly Brisbane, Perth, and Darwin, where vacancy rates are again sitting below 1%.
With advertised rents rising across many markets, SQM’s data points to renewed price pressures, with national combined advertised rents up 2.2% over the past 30 days and 7.3% higher year‑on‑year.
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