Australia's rental market showed little sign of relief in May, with the national vacancy rate holding at 1.2% despite a modest rise in total available dwellings — from 35,258 to 37,844 — according to new data from SQM Research.
Every capital city remains below the 2% threshold widely regarded as a balanced market.
SQM Research managing director Louis Christopher (pictured) urged caution against reading too much into the monthly vacancy uptick.
"Where vacancies did rise across a number of cities, that largely reflects normal seasonal patterns — May and June are typically among the higher-vacancy months of the year, outside the December peak, as leasing slows over the cooler months," Christopher said. "On a year-on-year basis the market is unchanged, sitting at the same 1.2% as it did in May last year."
The more telling picture emerges at the city level. Five capitals — Brisbane, Perth, Adelaide, Darwin, and Hobart — are still recording vacancy rates below 1%. Christopher noted that those five cities continue to indicate that rental supply remains severely constrained.
Brokers benchmarking rental yield for investment clients will find the income story compelling. National advertised rents rose 7.8% over the past year, with the combined national average now sitting at $700.04 per week and the capital city average reaching $797.37 per week, according to SQM Research data for the week ending 12 June.
The strongest growth is concentrated in the markets with the tightest supply. Darwin, which continues to record the lowest vacancy rate in the country at 0.3%, posted annual rent growth of 14%. Hobart recorded 12.3% annual growth, and Brisbane maintained 9.1% — among the strongest of the major capitals. Sydney remains 7.5% higher year-on-year, with house rents averaging $1,154.51 per week.
The structural undersupply story shows no sign of resolving.
"Australia's rental market remains fundamentally undersupplied,” Christopher said. “Without a substantial increase in housing construction and rental stock, and/or a meaningful decrease in population growth rates from current levels, affordability pressures are likely to persist through the remainder of 2026 and into 2027."
That outlook sits against a broader market shift worth tracking. Total property listings rose 10.4% month-on-month in May to 258,803 dwellings — moving into positive annual territory for the first time in over a year, according to a separate SQM Research report. Christopher described the combination of surging supply and stalling prices as an early sign the market may be at a turning point.
For the original reports and more property insights, head over to the SQM Research website.
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