Current Rental Market Dynamics for Each Capital City

• Vacancy rates across Australia remain very low, often under 1–1.5% in many capitals. A “healthy” vacancy rate is usually ~2-3%.

• Rents are rising in most capitals, often well above wage growth, contributing to affordability stress.

• Housing supply (especially of apartments) is lagging what’s needed to meet population growth and demand. Forecasts suggest apartment supply may average ~60,000 units/year, but the needed supply is closer to ~75,000 to avoid worsening vacancy rates.

  
  

Capital City Breakdown

Here’s how the rental market is shaping up in each capital city specifically:

City	Vacancy Rates / Supply	Rent Growth / Prices	Unique Pressures & Trends
Sydney	Vacancies remain extremely low (~1.5%), undercutting renter options. Slight seasonal uptick in some areas but no major relief.	Rents for houses rose ~8% annually, though more recently the growth rate has cooled (lowest June-quarter growth in several years). Units are still seeing growth, though less dramatic. Weekly rents are very high.	High competition, especially in desirable suburbs. Tenants increasingly price sensitive. Many renters moving to units rather than houses to find affordability. Also impacts from migration and demand from international students. Legislative and regulatory changes in NSW (tenancy).
Melbourne	Vacancies also low, though slightly more variation between suburbs. New apartment completions are projected to be at a 10-year low, which tightens supply further.	Rents continue to increase, especially in inner and middle suburbs. For houses and units both, growth has been strong. However, sale prices for apartments have been flat or even slight negative year-on-year in some cases.	Strong return of students & migrants pushing demand. Supply constraints especially affect apartment stock. Some suburbs seeing sharp competition. Also, those seeking affordability are being pushed outward. Policy & regulation impacts, especially in affordable housing/rental assistance.
Brisbane	Vacancy rates are extremely tight — many areas under 1%, inner suburbs even lower.	Rent growth strong, though somewhat moderated recently compared to the sharp spikes in earlier years. Demand remains high and pushing up rents.	Population growth and interstate migration boosting demand. Infrastructure projects (e.g. related to the 2032 Olympics) are creating localised pressure. Tenants are adjusting expectations and sometimes compromising on location or quality. Landlords benefit from tight markets.
Perth	Very tight supply, with vacancy rates often below 1%. Some reports suggest rates still under 1%, though there are minor signs of slight relief in outer areas.	Rents have surged, especially for apartments/units; house rents also increasing strongly. Affordability declining.	Perth is catching up: previously seen as more affordable, but that’s shifting. Strong demand, including from people relocating from east coast states. Supply of new dwellings is not keeping pace. Some suburbs now are priced near or above what used to be “premium” in other cities.
Canberra	Apartment completions are low (below historical norms), so supply is constrained. Rental supply is somewhat more stable than in the tightest markets, but still under pressure.	Rental price growth is more modest / stable compared to Sydney, Melbourne, Perth. There’s less volatility.	Being the seat of government, certain suburbs see spikes due to public service demand or moves. Also lots of shorter-term leases related to federal cycles, but overall demand is steadier. Quality of stock matters. Because supply is more balanced, tenants in Canberra might have slightly more negotiating room than in the tightest capitals.
Adelaide	Extremely tight. Vacancy rates are often below 1%.	Rent growth has been strong in Adelaide — houses especially have posted sharp quarterly rises. Some record weekly rents for certain types of houses.	One of the capitals with the fastest rent inflation over recent years. But affordability remains slightly better relative to Sydney/Melbourne for many renters, so Adelaide is seeing both spillover demand and local pressures. Also, quality and location are big differentiators.
Hobart, Darwin, Tasmania/NT	Also very tight in many areas. Vacancy rates frequently the lowest in the country in Hobart and Darwin.	Some of the strongest month-on-month rent growth in apartments in Hobart and Darwin. Because stock is small, changes show up quickly.	Regional constraints, travel/logistics, climate, amenity are big factors. Because of smaller stock, any new supply or demand shocks create more pronounced effects. Also, in these markets, short-term or holiday rentals can impact availability sharply.

Key Challenges & Emerging Signals

• Affordability gap: Rent increasing faster than wages in most capitals. For many renters, housing is taking up a larger share of income.

• Moderation in growth: After large increases in recent years, in places like Sydney & Melbourne, rent growth is starting to slow slightly (though “slowing” from very high levels).

• Supply lag / pipeline issues: Even when there is supply being built, many projects are delayed or cost pressures (materials, labour) are hurting the rate of completions. Planned stock often doesn’t come quickly enough.

• Demand side influences: Migration (internal & international), student return, household size shifts (e.g. more people sharing) are all putting consistent upward pressure.

• Seasonal or “waiting for adjustment” effects: Some upticks in vacancy are being observed — but many analysts caution these are seasonal or small, not yet structural easing.

  
  

What This Means for Different Stakeholders

• Tenants: It’s still a competitive landscape in most capitals. To secure a good rental, you may need flexibility on location, type (house vs unit), and condition. Early viewing, strong application credentials matter. Budgeting for higher weekly rents, especially in inner suburbs.

• Landlords / Investors: Opportunities remain, particularly in undersupplied areas or in cities with strong demand (Sydney, Perth, Brisbane). But also more regulatory scrutiny, cost pressures (maintenance, rates, building costs), and risk around affordability limiting tenants’ ability to pay in some areas.

• Policy Makers / Planners: The need to speed up supply (especially affordable & purpose-built rentals), reform planning approvals, consider rental assistance, and ensure that housing stock is of good quality and in locations with access to amenity and transport.

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Published by

Nick Karayanis B.Eng. UNSW (Civil)

Licensed Contractor NSW (Building)

Disclaimer:

The content of this blog is for informational and educational purposes only and should not be considered professional financial, legal, or real estate advice. Every real estate transaction and renovation project is unique, and you should consult with qualified professionals, such as real estate agents, contractors, and legal advisors, to address your specific needs and circumstances. The information provided here is based on personal experiences and research and may not reflect current market conditions or regulations in your area. Readers assume all responsibility for decisions made based on the content of this blog.