Australia’s Housing Market: What We’re Seeing Right Now

There has been plenty of noise in the headlines recently about the Australian housing market.

As buyer’s agents working with property buyers and investors every day, our perspective is clear: the pressure is not disappearing. What we are witnessing is not a short-term blip but a slow-burning crisis that has been building for years. Tight rental conditions, limited new supply and rising house prices are all part of the same story, and together they are reshaping the market for both renters and investors.

This is why we believe the question is not whether the crisis is easing, but how long these pressures will continue to shape rental conditions, investment opportunities and house prices across the country.

A Quick Look Back: 

Since late 2019, asking rents have surged more than 50% while vacancy rates have dropped by over half (CoreLogic, SQM Research). At the same time, property values have continued their upward climb: national home prices rose by 39.1% over the five years to March 2025, equating to roughly a $230,000 increase in the median dwelling value during that period. Some areas are showing signs of stabilisation, but the truth is clear: there is no single “Australian rental market.” What is happening in Sydney’s inner ring is very different to what is happening in Toowoomba or the Central Coast.

What We’re Seeing: 

The pressures we’re seeing in the rental market didn’t appear overnight. They’ve been building for years and the cracks are now showing more clearly than ever.

• Private landlords carrying the weight: More than 80% of rentals are supplied by private investors (ABS, Productivity Commission). With new rental listings still well below normal, even the small uptick in vacancy rates has not shifted the reality. Tenants are still competing hard for properties.
• Build-to-Rent cannot keep pace: It is often positioned as the answer, but right now BTR stock is only 0.6% of housing supply (Knight Frank, Franklin St). Even if every project under construction launched tomorrow, it would not materially change rental conditions. Promising in theory, but not solving things any time soon.
• Social housing shortfall: Demand for social and affordable housing has soared, while supply has shrunk. Waitlists are near record highs and the number of households in “greatest need” has jumped 66% over the past decade (AIHW, Productivity Commission). Unfortunately, the public sector simply doesn’t have the stock to keep pace.
• New housing at decade-lows: Housing completions are at their lowest point since 2014 (ABS, HIA). High construction costs, labour shortages, and tighter financing conditions for developers have made it harder for projects to get off the ground. With fewer new homes being built, supply pressure is only likely to intensify in many areas. We are not seeing relief here any time soon.
• Construction sector & planning approvals: The toughest part about building homes in Australia is not laying bricks, it is navigating the approvals process. Developers are slowed by land deals, permits, infrastructure demands and layers of red tape. Combined with already high costs and tight margins, this means fewer projects breaking ground and fewer homes flowing into the market.
• Population growth fuelling demand: In 2023, Australia welcomed the highest migrant intake in more than 50 years at 547,000 (ABS). Most new arrivals rent before buying, funnelling more demand into an already tight market. And it’s not just Sydney and Melbourne feeling the squeeze… regional hotspots are under the pump too.

• Rent Outpacing Wages: Another challenge we are seeing is that rents are rising far faster than incomes. ABC News reports that since the pandemic, rents have increased around four times faster than wages in Sydney, 3.4 times faster in Melbourne, and 3.1 times faster in Brisbane (ABC News, April 2025). Similar trends are being recorded in regional areas as well. This widening gap is making affordability more difficult for renters and is a key reason rental pressure is not easing any time soon.

The issues holding the rental market back are not going away any time soon, which means this environment is set to stick around a while longer.

What This Means for Investors: 

So, what does all this mean if you are growing (or planning) a portfolio? A few big things stand out.

• Ultra-low vacancy rates equal strong rents: Markets like Toowoomba (sitting at just 0.5% vacancy, SQM Research) continue to show high demand, and we have helped multiple clients purchase there over the past five years. Closer to home, Central Coast suburbs such as Wamberal, Terrigal and those in the 2261 postcode are still holding below 2% vacancies.
• Yields holding up despite higher interest rates: When supply is this tight, landlords benefit from stronger yields. That is translating to positive cash flow opportunities in certain areas, particularly for investors willing to look beyond the big capital city headlines.
• Local data matters: It is easy to think a whole city is “up” or “down,” but drill down one level further and you will often see suburbs behaving very differently. Granular, suburb-level research is what separates the investors who stay ahead from those who simply follow the crowd.

Our Take: 

From where we sit, the fundamentals are not pointing to a sudden easing of pressure. Demand is high, new supply is weak, and affordability remains stretched. This means the rental market is likely to remain tight for some time yet.

For investors, that creates opportunity, but only if you know where to look and only if you match the right strategy to your goals.

Curious which markets are still delivering strong rental growth? Let’s chat about how to align the right strategy with your portfolio. Reach out to our team today.