The situation facing Australian tenants continues to worsen, with Cotality reporting accelerating rental growth and a decline in vacancy rates back to record lows.
Cotality’s housing market results for May 2026 show that annual advertised rental growth in Australia accelerated to 5.9%, the largest annual increase since the 12 months ending September 2024.
As illustrated below, most capital cities have seen annual rental growth accelerate over recent months.
Source: Cotality
The acceleration in advertised rents follows a decline in the national rental vacancy rate back to a historical low of just 1.5%.
Cotality’s commentary accompanying the rental market results suggested that the situation facing renters will continue to worsen, with Cotality research director Tim Lawless noting that tenants are likely to be forced into group housing in order to economise on costs.
“Upward pressure on rents is likely to persist due to very low vacancy rates. The national vacancy rate dipped to 1.5% in May, in line with the record lows seen in 2022 and 2023, when the catch-up phase of overseas migration pushed vacancy rates lower”.
“With renters dedicating around a third of their pre-tax income to rental payments, it’s uncertain how much longer this upswing in rents can last”.
“With the cost of renting up about $204 a week over the past five years, renters are likely to be at or approaching a ceiling on how much they can pay, potentially driving structural changes in rental demand”.
“While the data is hard to come by, it’s likely rental households are becoming larger as group households and multigenerational households become more common”.
The rental crisis in Australia is being fueled by recent extreme levels of net overseas migration, which has flooded the nation’s rental market with around 1.3 million more people seeking accommodation.
Recent federal budgets have dramatically underestimated the strength in net overseas migration:
Indeed, last month’s federal budget upgraded net overseas migration by 55,000, which inevitably means more demand pressure on the nation’s housing market.
Meanwhile, the supply side of the housing market remains bottlenecked amid soaring input costs, labour shortages, and high interest rates.
As a result, CBA has downgraded its forecast for dwelling construction following the war in the Middle East and the latest uplift in input costs.
So long as the federal government continues to run an excessive migration program in a supply-restricted market, Australia’s rental crisis will continue to deteriorate.
