Tenants squeezed as rents rocket, vacancies vanish   

New Daily
Oct 14, 2025


Australia's rental market has tightened again, driving rents to new highs.



Australia’s rental market has slammed the accelerator back down, and tenants are feeling the squeeze.   

According to the latest data from Cotality, national vacancy rates have plunged to record lows just as rents surge, risking further hardship for millions already stretched to the limit.


Vacancy crashes to historic low as rent growth reaccelerates
Cotality’s Seasonally Adjusted Rental Value Index, released last week, revealed a 1.4 per cent increase in national rents in the third quarter, the most aggressive three-month rise since June 2024, and a noticeable jump from the 1.1 per cent lift in the second quarter.

On an annual basis, rents climbed 4.3 per cent in the 12 months to September, up 90 basis points from the four-year low of 3.4 per cent for the year to May.

Cotality economist Kaytlin Ezzy pointed to a brutal imbalance in the market as the key driver of this rebound:

“Ongoing scarcity in ‘for rent’ listings, coupled with continued strength in rental demand has pushed the national vacancy rate to a new record low of 1.47 per cent – less than half the pre-Covid decade average of 3.3 per cent,” she said.

“Limited supply continues to be a major catalyst in rising rents, with the number of rental listings tracking approximately 25 per cent below the previous five-year average nationally for this time of year.”

Ezzy said unit supplies were particularly tight, especially in Sydney, which had “both a new record low vacancy rate across its unit sector and broader dwelling rental market in September at 1.35 per cent and 1.64 per cent respectively”.

Despite investor activity in home lending in recent years, Ezzy noted it had not translated into more rental stock.


rents

Capitals breach $700 – regional rents closing in

The tight squeeze is pushing capital city rents into uncharted waters.

The median weekly rent across combined capital cities has officially smashed through the $700 mark, reaching $702 in September.

By contrast, regional markets are holding below $600 a week, with a median rent of $591, but the gap is narrowing.

“With the regions outperforming the capitals through the second half of 2024 and into 2025, the affordability advantage offered by regional rental markets has reduced from $123 in May 2024 to $111 in September,” Ezzy said.

Sydney remains the national harshest rental market at an average of $807 a week, while Hobart continues as the more tolerable option at $584 a week.

Rent spikes may worsen inflation, extend interest pain
Unfortunately for renters, the resurgence in rent growth could spread to the broader economy.

“The news that rents are once again rising at a higher rate will be unwelcome news for renters already struggling with the 43.8 per cent or $204 per week increase in rents seen nationally over the past five years,” Ezzy said.

“But it’s probably also unwanted news for homeowners and landlords servicing a mortgage.”

Because “rents paid” is a key component in the Consumer Price Index, the increased pace of rental growth may push headline inflation higher.

“Along with some renewed upwards pressure from the cost of new dwellings, this renewed momentum in rents may lead to inflation exceeding Reserve Bank forecasts, which could keep the cash rate elevated for longer,” she said.

More income swallowed, more households squeezed
For many renters, these figures are more than metrics, they reflect everyday hardship.

Wages haven’t kept up. Renters are spending a greater share of their post-tax earnings just to keep a roof overhead, a burden that has steadily edged upward.

The contagion of tight supply, soaring rents and inflation risks converges on everyday Australians: Families forced to live further out, share houses, downgrade or simply endure housing stress.