The latest rental vacancy report from SQM Research showed that the nation’s vacancy rate fell to 1.0% in January 2025, down 0.1% from a year earlier.
“The sharp decrease in rental vacancies strongly indicates Australia’s rental market crisis is not over and has potentially deteriorated at the start of 2025”, SQM Research noted.
SQM Research also recorded a sharp rise in rental prices in January following a period of moderation in 2024. Capital city advertised rents rose by 1.6% over the month.
CoreLogic reported that national rents rose by 0.6% in February, the strongest monthly gain since May last year.
Source: CoreLogic
“Rental trends are highly seasonal, and the pickup in rental growth through the first quarter is likely driven by this seasonal phenomenon”, CoreLogic’s head of research, Tim Lawless, noted.
However, “the broader trend points to a slowdown in rental growth as households become larger and net overseas migration normalises”, Lawless said.
Nationally, rents rose by 4.1% over the 12 months to February, the slowest annual gain since the 12 months ending March 2021.
CoreLogic noted that Sydney, Melbourne, and Brisbane have driven the slowdown in national rents.
“These cities have also seen the biggest impact from normalising net overseas migration, which, together with a trend towards larger households, has helped to take some heat away from rental demand”, Lawless said.
The Australian Bureau of Statistics’ (ABS) official migration data shows that immigration has passed its peak, but remains at historically high levels.
In addition, the average household size has rebounded, and is now tracking above the levels of the early-to-mid-2000s across the capital cities.
Rental vacancy data from the REIA also suggests the vacancy rate has eased a little but remains tight overall.
The biggest constraint on rents is affordability itself. The share of income required to meet rent payments hit a record high in late 2024 and there isn’t much scope to raise rents much further.
Australian rents have hit an affordability ceiling, which has contributed to the rise in group housing.
