Australia’s rental crisis is a policy choice


CoreLogic reported a further acceleration in Australia’s rental growth in March, with the national rental index rising 2.8% in Q1, the fastest quarterly pace of rental growth since the three months ending May 2022 (2.9%).

CoreLogic rental growth

Source: CoreLogic

“The annual trend in rental growth has generally been moving higher since October last year, implying the reacceleration in rental growth is more than a seasonal inflection”, CoreLogic noted.

Michael Yardney, a well-known property investor, published an article late last month asking: “How long will Australia’s rental crisis last?”


Yardney believes the rental crisis will continue for a prolonged period, driven by the growing imbalance between demand (driven by high net overseas migration) and supply (falling due to pandemic-related bottlenecks).

“Australia’s rental crisis isn’t going to be resolved any time soon… in fact, it’ll probably just worsen further”.

“Here’s why…”

“A perfect storm of ultra-low vacancy rates, rising rents, and low supply is strong”…

“Net migration is forecast to remain strong for some time yet and this will only add further upward pressure on rental values”…

“Australia is having difficulty creating enough accessible, reasonably affordable houses and units to shelter our current population”.

“Yet into this mix, is also a whole new wave of demand in the form of immigration”.

“After years of closed borders, we flung Australia open to the world in early 2022…”

“But that flood of new migrants comes at a cost”.

“Australia’s population reached 27 million, more than thirty years ahead of predictions”.

“Australia’s population will be 41 million by 2042, 16 million more than the 2002 forecasts”…

“The question is: Where are all these people going to live as most new residents rent for the first couple of years before they finally settle into a home of their own?”

Yardney is correct, of course.

The federal government’s deliberate decision to open the immigration floodgates is the primary cause of Australia’s rental crisis.

Australia’s population surged by 660,000 people in the year to September 2023, driven by a record net overseas migration of 549,000:

Australian population change

This population surge has occurred alongside the crash in actual dwelling construction to decade lows:

Housing supply and demand

As a result, rental vacancy rates have collapsed to record lows across the major capital cities:

Rental vacancy rates

And median advertised rents have soared following the reopening of the international border in late 2021:

Median advertised rents

Australia’s rental crisis will remain so long as the Albanese government maintains the throttle on immigration.

The crisis is a direct policy choice delivered to you by the federal government.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.