Australia’s national rental vacancy rate rose 0.2 percentage points in July to reach 1.5%, the highest level since February 2022, according to the latest realestate.com.au Market Insight report.
The increase was consistent across both capital cities and regional areas, each recording a 0.2ppt rise to sit at 1.5% for the month, according to the report, authored by realestate.com.au Senior Economist Anne Flaherty.
Canberra recorded the highest capital city vacancy rate at 1.9%, followed by Melbourne on 1.8% and Sydney on 1.7%. At the other end of the scale, Hobart and Darwin remained the tightest markets at 0.9%, with Brisbane at 1.0% and Perth at 1.1%, according to the report.
Despite the monthly rise, capital city vacancy rates are still 1.1ppt lower than they were five years ago, and remain well short of the 2.5-3.5% range considered a balanced market.
“Choice for renters improved in July, with the volume of available rentals up in every capital city and regional area compared to three months ago. While vacancy rates have increased, they remain well below the 2.5-3.5% level considered to be a balanced market,” Anne said.
Anne attributed much of the recovery to a surge in investor activity, with new loans to investors tracking at the highest level since the Australian Bureau of Statistics began reporting the data in 2019. She expects that trend to reverse.
“That surge in investors is likely behind the recovery in vacancy rates this year. However, this trend is now likely to reverse following the reduction in tax concessions for investors as part of the May Budget. This is expected to lead to a slowdown in the rate at which new rental supply is added moving forwards,” Anne said.
The modest easing in supply comes as separate research from the Australian Housing and Urban Research Institute (AHURI) puts a spotlight on just how unstable the private rental experience can be for tenant families, particularly those with children.
The AHURI-commissioned study, led by Amy Clair, an Associate Professor at Adelaide University, found children growing up in private rentals had moved an average of six times by age 14 – compared with just over twice for children in homes owned outright, and just over four times for children in social housing.
“There is a growing evidence base positioning housing as a critical determinant of children’s physical and mental health, behavioural outcomes, developmental vulnerability and educational attainment,” Amy said.
The research also found around 18% of households with children in private rentals were behind on a housing payment, compared to about 7% of households with a mortgage, while roughly 10% of children in private rentals experienced overcrowding, against 3-4% of children in owner-occupied homes.
“Results were concerning, as housing impacts mattered most during developmental transitions, such as starting school, when disruption can compound other disadvantages,” Amy said.
The study also tracked a broader shift in how Australian families house themselves. Between 2001 and 2023, the proportion of households with children living in homes owned outright fell 52%, while those in social rentals dropped 46% and those in private rentals rose 20%. Few of those renting families reported doing so by choice, with just 7% saying they preferred it and 8% citing flexibility.
“Children’s lives are being shaped by housing, but we need the data to see how this is happening, and for policymakers to use the insights to craft policy that will improve housing outcomes for children,” Amy said.