Australia’s rental crisis worsens

The Australian rental market has tightened once again after a short reprieve, with the national vacancy rate dropping in January and further falls predicted.

Australian tenants are faced with worsening rental conditions. Picture: NCA NewsWire/Max Mason-Hubers

The Australian rental crisis continues with the vacancy rate tightening once again and expert prediction pointing to further falls off the back of low supply and increased migration.

The latest rental vacancy data from SQM Research showed the national vacancy rate fell 0.5 percentage points in January to just 1 per cent, with the number of homes available for rent across Australia dropping from 47,336 to 31,822.

The vacancy rate was also down 0.1 per cent year-on-year.

SQM Research managing director, Louis Christopher said the sharp decrease in rental vacancies strongly indicated Australia’s rental market crisis was not over and could deteriorate further.

“It looked like there was an easing in the vacancy rate at the end of 2024 and we were coming out of the rental crisis, but that’s not the case now,” he said.

“The rental vacancy rates have completed tightened up once again to some of the worst numbers we’ve seen during this rental crisis.”

“Some cities have hit record lows or close to record lows and there are cities recording vacancy rates below 1 per cent.

“Hobart is just 0.3 per cent, which is the lowest since our records began in 2005, and Brisbane fell to 0.8 per cent, which is the second lowest vacancy rate we’ve recorded for the city.

“We’ve got some February weekly listing numbers already and the numbers are lower that we had in January.”

SQM Research managing director, Louis Christopher. Picture: Supplied

Mr Christopher said an undersupply of housing combined with increased migration could be responsible for the strain on Australian rental markets.

“We know one factor for sure (that is causing the rental crisis) – we continue to underbuild in Australia and we’re at a new low record of dwelling completion,” he said.

“Over and above this, our concern is what is not known, and that is the real time, present level of overseas arrivals.

“We don’t know the migration numbers for January but I suspect there has been a surge.

“Clearly something has driven this retreat in rental vacancies.”

Canberra saw the greatest drop in available rental properties last month out of the capital cities, with the vacancy rate down 0.9 percentage points to 1.3 per cent.

Sydney and Melbourne each dropped 0.7 percentage points in January to sit at vacancy rates of 1.4 per cent and 1.5 per cent respectively, while Darwin dropped from a vacancy rate of 1.7 per cent to 1.1 per cent between December and January.

This Townsville home at 33 Royal St, Wulguru, is listed for rent at $600 per week as the rental market tightens across Australia. Picture: realestate.com.au

Brisbane’s vacancy rate dipped 0.4 percentage point month-on-month to 0.8 per cent while Perth and Adelaide were both down 0.3 percentage points to 0.4 and 0.5 per cent respectively.

Hobart recorded the lowest vacancy rate of the capitals in January, down 0.3 percentage points to just 0.3 per cent.

Mr Christopher said vacancy rates tended to tighten at the start of the year but this worse than expected.

“We’re recording higher vacancy rate increases compared to this time last year with the national vacancy rate tighter than January 2024,” he said.

The SQM Research report showed the median average weekly rent in Australia dipped 0.5 per cent to $643.24 in January.

House rents remained unchanged month-on-month at $718 while unit rents dropped 1.2 per cent to $557.

Across January, rents were up 2.3 per cent in Perth ($752), 1.7 per cent in Melbourne ($640), 1.4 per cent in Sydney ($840) and 1.1 per cent Canberra ($681).

Rents were also up 0.6 per cent in Brisbane ($671) and 0.3 per cent in Adelaide ($614) but down 1.7 per cent in Darwin ($604) and 2.1 per cent in Hobart ($515).