There is a difference between a rental market that is easing and one that is becoming easier for people to live in.
Australia’s rental figures suggest some pressure is beginning to moderate. Rental growth has slowed, supply has improved in some locations and tenants in parts of the country have more choice than they did a year ago.
These are encouraging signs. But record-high rents tell another part of the story.
For renters already dealing with the cost of living, slower growth doesn’t necessarily mean greater affordability. For landlords, rental income needs to be weighed against rising mortgage costs, maintenance, labour and the importance of retaining good tenants.
The rental market hasn’t suddenly become easy. It’s changing, and that requires landlords and property managers to respond accordingly.
There is no single Australian rental market
National figures can conceal very different local experiences. In some markets, including Melbourne and Canberra, renters are beginning to see a little more room to move. In others, such as Perth, Adelaide and Hobart, competition remains intense.
Even within the same city, conditions vary depending on the suburb, property type, price point and quality of the home.
For landlords, this means understanding where their property sits in the current market and setting a realistic rent based on comparable homes and actual tenant demand. For tenants, more choice is welcome, but finding a suitable home within budget remains difficult for many.
Yesterday’s conditions are not necessarily a reliable guide to today’s decisions.
Affordability remains part of the story
When rental growth slows, it can be tempting to interpret that as a sign that pressure on tenants is easing. But affordability is about more than how quickly rents are increasing.
It is also about the level rents have reached and how much of a household’s income is already committed to housing.
We’re seeing signs that affordability is placing limits on what some parts of the market can sustain. In certain suburbs, there is a ceiling on what tenants are prepared or able to pay.
In Brisbane, for example, a snapshot of a prestige inner-city market a few months ago showed 29 executive rental properties priced above $1,200 a week that had been on the market for a couple of weeks.
More recently, a check within a five-kilometre radius found more than 50 rental properties priced above $1,200 a week.
These figures offer a glimpse of the competition at the top end of the market. Even tenants with higher budgets have choices to weigh up, and landlords need to be realistic about how their property is priced and positioned.
Setting a rent is not simply about seeking the highest possible return. It is about finding the right level for the property and the tenants it is likely to attract.
More choice only goes so far if the available homes remain beyond a tenant’s budget.
Investors and the rental supply question
Landlords are weighing up borrowing costs, maintenance, insurance, taxation and their own financial circumstances. Some will choose to hold their properties, while others may decide that selling is the right decision.
Owning an investment property comes with real financial responsibilities. Mortgage costs, insurance, labour and maintenance expenses continue to put pressure on household budgets, and urgent repairs can arise without warning.
Rental income needs to help cover those costs and allow owners to maintain their properties properly. Seeking an appropriate rental return is not simply about maximising profit; it can be essential to keeping a property financially viable and in good condition.
The challenge is that these costs don’t automatically translate into what the market will pay. Where rents are reaching their affordability ceiling, landlords may have limited room to pass on further increases.
Realistic pricing and careful financial decisions become even more important.
There is also a broader question about what happens when an investment property is sold. If another investor buys it, the home may remain available to renters. If an owner-occupier purchases it to live in, it leaves the rental pool.
That doesn’t mean investors should be discouraged from selling when their circumstances change. But when considering rental supply, the number of properties sold is only part of the picture. Who buys those properties, and whether they remain available to tenants, also matters.
Changes to tax settings are another factor investors are considering. It will take time to understand their full effect on investment decisions and the supply of rental homes.
Ultimately, a sustainable rental market needs sufficient housing, supported by investment, new supply and effective management of the properties already available.
The role of property management is changing, too
For property managers, a changing market brings a responsibility to look beyond the immediate transaction. When demand is strong, the focus is often on helping landlords secure suitable tenants in a competitive market.
When conditions soften, the work becomes more nuanced. It means helping landlords understand the rent their property can realistically achieve, identifying opportunities to retain good tenants, addressing maintenance issues promptly and communicating openly when circumstances change.
The aim is to achieve a sustainable rental return that reflects the market, helps cover the costs of ownership and keeps the property competitive.
Sometimes an increase is justified; in other circumstances, pushing beyond what tenants are prepared to pay can lead to a longer vacancy and a poorer financial outcome for the owner.
This is where experience and local knowledge matter. Property managers need to understand the market, but they also need to understand the people involved and the practical decisions that help a tenancy work for both parties.
Progress means getting the balance right
Slower rental growth and improving availability in some markets are positive developments. They may signal that the extraordinary pressure of recent years is beginning to moderate in parts of Australia.
But it is too early to confuse moderation with resolution. Renters still need access to homes they can afford.
Landlords need a viable reason to maintain and invest in rental property. Property managers have a role in helping both parties navigate the market with clear information, realistic expectations and respect for their respective interests.
A healthier rental market will be defined by whether more people can find a suitable home, whether tenancies can be sustained over time and whether providing rental housing remains a viable proposition.
The market is changing. The opportunity is to use that change to make better decisions, rather than assume the job is done.