Rental Growth Accelerates as Vacancy Rates Tighten – What Buyers Should Know

Australia’s rental market is showing renewed momentum. Cotality’s latest report finds national rents rose 1.3% in Q4 2025, lifting annual growth to 5.2%. In practical terms, the national median rent is now about $681/week – roughly 43% higher than five years ago. For buyers and investors, that’s encouraging: higher rents boost yields and confirm that demand for rental housing remains strong. In other words, steady rent growth supports long-term asset demand for property, reinforcing real estate’s appeal as a hedge against rising costs.

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As a result, rental vacancy rates are at an all-time low; Cotality reports that vacancy rates have dropped to around 1.7%, down from an average of 3.3% pre-COVID. The extreme tightness of this market indicates that very few rentals are vacant for long, and this represents a positive indicator for investors, meaning that in hot markets, there will likely be periods of low vacancy, or perhaps no vacancies whatsoever. Additionally, this trend illustrates the fact that this issue is not just temporary, since with so little new supply hitting the market, landlords are easily able to fill vacant units and keep rental income consistent.

Supply Shortage Is Structural, Not Temporary

Indeed, the core issue is a chronic supply squeeze. The number of available rental listings is down about 11% year-on-year (and 17% below the five-year average). This shortage is driving rent increases. For property buyers, this means the market imbalance is likely to last. A growing population and slow new builds mean tight supply is structural. In practice, buyers face intense competition and rising prices on both purchase and rental fronts. A buyer’s agent can be valuable here – we monitor off-market opportunities and help you act quickly when a rare listing appears.

Regional Markets Continue to Outperform

It’s also worth noting where growth is strongest. Regional areas are currently outpacing our big cities on rents. Cotality’s data shows regional rents jumped about 6.2% annually, compared to 4.8% across combined capital cities. Some smaller markets (like Darwin and Hobart) are leading the pack. This split has strategy implications: city apartments may offer stability, while certain regional towns could deliver faster rent growth. A balanced portfolio might consider both. As buyer’s agents, we help clients weigh these trade-offs based on their goals, whether it’s chasing high income or long-term price gains.

Rental Affordability Pressure Is Near Record Highs

All this has put Australians under pressure. Renters now spend a record ~33.4% of their income on housing, the highest level on record. This tells us rents are rising faster than wages, squeezing tenants’ budgets. For investors, high rent-to-income ratios mean tenants are competing hard for each property, which keeps rents up – but it also raises social and inflation concerns. For a potential homebuyer, it might signal that buying could offer relief from soaring rents (if you can get finance). In any case, the tight rental market makes every property contest fierce. That’s why buyer’s agents at Prowealth focus on preparation: checking your borrowing power early, defining a clear strategy (capital city or regional), and helping you bid confidently.

Ready to take advantage of these trends? Our buyer’s agents at Prowealth Properties can guide you through this hot market. We’ll help clarify your goals, assess your borrowing power, and build a shortlist of the right suburbs and properties. Call us on +61 433 853 248 or book a free consultation to discuss your strategy. We’ll make sure you’re set to turn today’s rising market into your best purchase.

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