Australia’s rental market has seen a moderation in price growth over the September quarter, driven in part by a reduction in migration and an increase in available rental properties, though experts caution the broader rental affordability crisis remains unresolved.

Data from Realestate.com.au indicates that average weekly rents increased by $10 to $675 nationally during the three months to September. This represents a significant slowdown from prior periods, coinciding with a rise in the national vacancy rate from 1.3 percent in June to 1.5 percent in September—the highest level recorded since February 2022. Nevertheless, vacancy rates have consistently remained below the 3 percent threshold typically regarded as balanced for rental markets over the last four years.

The easing in rental price growth appears linked to additional housing stock entering the market. Realestate.com.au economist Megan Lieu noted that investors comprised about 40 percent of property buyers at the start of the year, contributing to increased rental supply and improving vacancy figures. However, she suggested this effect may be temporary, with investor activity expected to decline following policy changes introduced in the May federal budget.

Regionally, the largest rental increases occurred in Brisbane, where median weekly rents rose by 2.9 percent for houses, reaching $720, and climbed 2.3 percent for units. Sydney house rents increased by 0.6 percent to $850 weekly, while Melbourne unit rents saw a modest increase of $5.40 per week. Rental costs in Adelaide and Perth remained stable during the quarter. Regional areas registered a 3.3 percent rental increase, buoyed by a sharp 12.3 percent rise in the Northern Territory.

Despite these developments, analysts warn that the rental affordability crisis persists. Tim Lawless, director of research at Cotality Asia-Pacific, cautioned against interpreting higher vacancy rates and slower rent growth as clear signs of market improvement. He attributes rising vacancies partly to shifting demand patterns, as renters face historically high levels of unaffordability and adjust their living arrangements accordingly.

Lawless also pointed to the gradual normalization of net overseas migration as a factor easing rental demand. He noted that political commitments by major parties and One Nation to reduce immigration levels further could sustain this trend. “If migration numbers fall, it may lessen upward pressure on rents and contribute to increasing vacancy rates,” he said.

Investor returns have improved alongside rising rents and falling property prices, with gross rental yields reaching 3.85 percent nationally—the highest since before the COVID-19 pandemic. Regional Australia outperforms capital cities in this regard, with yields averaging 4.31 percent compared to 3.7 percent in combined metropolitan areas. Darwin leads with a 6.52 percent yield, while Sydney records the lowest at 3.40 percent. Nonetheless, Lawless noted that investors increasingly face challenges in securing properties that are positively geared or cashflow-neutral in the current market environment.