Australia’s rental crisis is deepening as prices rise despite the highest vacancy rate in years

Australia’s rental market has offered a glimmer of hope for distressed tenants, with the number of vacant properties nationally reaching its highest level since February 2022. However, any celebrations may be premature, as the latest data reveals that despite the easing conditions, rental prices continue to rise relentlessly, pushing energy affordability to many.

The latest realestate.com.au Market Insight report shows the national rental vacancy rate increased by 0.19 per cent in January to 1.48 per cent.

While this marks the highest level in almost two years, it remains below the pre-Covid figure of 2.3 per cent recorded five years ago – a sobering reminder of the entrenched supply crisis.

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Nationwide, all markets saw vacancy rates rise in January, providing some relief. Major cities had an increase of 0.17 percent, reaching 1.51 percent, now sitting slightly above regional areas at 1.40 percent. This suggests a broad, albeit small, improvement in the availability of leases.

Strong compression and where the tenants get air

Despite the country’s trend, some capitals remain fiercely competitive.

Hobart, often the bellwether of tight conditions, recorded the biggest monthly jump in the space (up 0.36 per cent) but still holds the undisputed title of the country’s tightest market with a meager 0.72 per cent.

Perth and Brisbane are not far behind, with vacant rental properties sitting at 1.11 per cent and 1.13 per cent respectively, reflecting strong competition for available space.

In contrast, Melbourne tenants get more breathing room.

The Victorian capital recorded the highest vacancy rate of all major cities in January, rising by 0.22 per cent to 1.81 per cent.

Darwin (1.76 per cent) and the ACT (1.59 per cent) also offered relatively more options, followed by Sydney (1.55 per cent) and Adelaide (1.45 per cent).

Adelaide, however, saw a 0.30 percentage point increase in its vacancy rate during the month.

The endless march of rental prices

While the increase in vacant properties may sound like good news, it has done nothing to stop the continued upward trend in rental prices.

For most caps, weekly house prices have remained stubbornly unchanged over the past three months.

However, some cities are still experiencing dramatic growth.

According to PropTrack, renters in Adelaide saw a weekly increase of $15 between November and February, bringing rents to $625 per week.

The latest PropTrack data revealed average weekly rents for each income. Image: Google Gemini

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Tenants in Brisbane are facing an even more dramatic increase, with an extra $25 a week required, bringing their weekly rent to $675.

Sydney continues to lead the pack with an average weekly rent of $800, followed by the ACT at $710. Perth and Darwin both sit at $700 a week, while Hobart is asking for $598, while Melbourne is offering ‘cheap’ capital city rentals for $580.

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REA Group Senior Economist Anne Flaherty noted that while employer conditions have improved over the past three months, they are “unchanged from last year” and are “well below the conditions employers faced during the pandemic five years ago when the national vacancy rate sat at 2.3 percent.”

“With the highest vacancy rate of any major city, tenants in Melbourne are facing a huge supply of tenancies. On the other hand, tenants in Hobart are facing a very challenging situation, with only 0.72 per cent of rental properties vacant,” he said.

Realestate.com.au senior economist Anne Flaherty

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Ms Flaherty also pointed out that regional areas have seen the biggest relief, with vacancy rates rising by 0.21 per cent a year, compared to just 0.03 per cent in the combined capitals.

Looking ahead, Ms Flaherty issued a stark warning.

“Although the pace of rent growth slowed in all markets last year, continued vacancy rates are expected to drive rents higher in 2026, particularly in markets where property purchases are constrained, such as Hobart, Perth, and Brisbane,” he said.

The message is clear: while the gradual reduction in vacancy rates offers some temporary relief, Australia’s rental crisis is far from over, and affordability will remain a major challenge for years to come.