Rental Crisis Deepens Across Capital Cities

Across Australia’s major capital cities, the rental market is tightening at an alarming rate. Skyrocketing rents combined with historically low vacancy rates are placing an unprecedented strain on tenants, many of whom are facing insecurity, long commutes, or even homelessness.

A Nationwide Crunch

Recent reports from property analysts reveal that median rents in Sydney, Melbourne, Brisbane, and Perth have increased by an average of 15-25% in just the last year.¹ Vacancy rates have plummeted to below 1% in most cities — a level economists consider critical for a healthy rental market.² This mismatch between supply and demand is forcing many Australians to make difficult choices between housing and other essential expenses.

“In Sydney, it’s common to see dozens of applicants vying for a single two-bedroom apartment, making the hunt exhausting and often heartbreaking.”

Drivers Behind the Crisis

• Population Growth: Australia’s population growth, fueled by post-pandemic migration and natural increase, has surged particularly in urban centres.
• Housing Supply Constraints: Construction bottlenecks, rising materials costs, and labour shortages have slowed new housing developments.
• Investor Behaviour: Tighter lending conditions and increased taxes on investment properties have reduced landlord participation in the rental market.
• Short-Term Rentals Impact: The expansion of Airbnb and similar platforms has diverted housing stock from the long-term rental market.

Existing Policy Responses

Various state governments have introduced targeted measures: rent freezes and caps in the Australian Capital Territory, land tax reforms in Victoria, and accelerated development approvals in Queensland. However, experts argue these efforts remain fragmented and insufficient to tackle the root causes.

Potential Solutions on the Table

Housing economists and advocates suggest several policy directions that could ease the crisis:

• Build-to-Rent Initiatives: Encouraging large-scale purpose-built rental properties owned by institutional investors.
• Rental Assistance Payments: Direct subsidies for low-income renters to reduce housing stress.
• Vacancy Taxes: Penalising property owners who leave homes unoccupied, particularly in high-demand markets.
• National Housing Strategy: Coordinated efforts between federal and state governments for sustainable supply planning.

Without bold and coordinated policy action, many fear the crisis will worsen, with social consequences including increased homelessness, reduced labour mobility, and deeper economic inequality.

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The Human Impact

Behind the data are stories of families forced to relocate far from work, young people delaying independence, and seniors facing housing insecurity. For example, single mother Lisa from Brisbane recently shared how a rent increase forced her to move two hours from her job, straining her daily life.

“We couldn’t keep up with the rent hikes. Moving was the only option, but now my commute has doubled, and it’s exhausting.”

Looking Ahead

As housing affordability tops political agendas ahead of upcoming elections, policymakers face mounting pressure to deliver sustainable solutions. For renters, the hope is that these efforts translate into tangible relief — stabilised rents, increased housing supply, and stronger tenant protections.

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Note: Rental figures and vacancy rates referenced are drawn from the Australian Housing and Urban Research Institute (AHURI) 2024 report and respective state housing authorities.