Australia's rental market remains under significant strain even as house prices eased for the first time in years, according to the Real Estate Institute of Australia's (REIA) latest housing affordability data for the June quarter.
The national median rent for a three-bedroom house rose 1.2% over the quarter to $651 a week, up 4.8% annually. Darwin recorded the steepest rise, up 12.7% for the quarter and 19.5% over the year, with Hobart and Perth also posting continued rent growth. Vacancy rates stayed below the 3% benchmark for a balanced market in every capital, with Adelaide tightest at 0.7%.
That national squeeze splits sharply by city — SQM Research data shows Sydney and Canberra vacancies easing, with Sydney's vacancy rate at 1.7% and Canberra's climbing to 2.1%, even as Perth and Adelaide remain the tightest large markets at 0.6 per cent each.
REIA president Jacob Caine (pictured) said softer sale prices did not signal an easing in Australia's broader affordability challenge.
"Higher borrowing costs continue to place substantial pressure on prospective buyers, while conditions in the rental market remain exceptionally tight," Caine said.
The national median house price dropped 1.2% to $1,135,560, its first quarterly fall since September 2024. The median price for other dwellings fell 0.9% to $751,839, its first decline since March 2023. Despite the softer quarter, annual growth stayed positive, up 7.9% for houses and 6.1% for other dwellings.
Caine said the figures pointed to a genuine change in buyer conditions, with households absorbing three cash-rate increases during 2026 alongside heightened international pressures and lingering uncertainty following the housing tax changes proposed in the May federal budget.
Those changes are already reshaping investor strategy — Ray White research points brokers toward regional markets offering yields above 15%, as new negative gearing rules limiting the concession to new builds from July 2027 push investor demand toward established housing where new supply isn't an option.
Results varied sharply by city. Hobart led house price growth for the quarter, up 3.9%, while Adelaide edged higher and Brisbane held steady. Melbourne recorded the largest fall, down 3.1%, followed by Perth, down 2%. Among other dwellings, Canberra was the only capital to post a gain, up 3.2%, while Sydney and Darwin held flat.
Caine linked the divergence between falling prices and rising rents to Australia's underlying housing shortage, warning that policies weakening investment confidence or adding uncertainty risk making the imbalance worse. He called for faster planning approvals, improved construction capacity, and more stable investment settings to lift housing supply across both ownership and rental markets.
For brokers, the figures point to a market recalibrating under higher rates, even as rental undersupply keeps pressure on tenants and investors alike. With the RBA's next rate decision due on 29 September, continued caution from buyers looks likely in the near term.
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