Conditions in Australia’s rental market eased again in October, according to Cotality, with rental vacancy rates jumping to a five-year high of 2.4% across the combined capital cities and annual rental growth slowing to 5.2%:
As illustrated below by Justin Fabo from Antipodean Macro, rental vacancy rates have risen across all of the capital cities:
Separate data from SQM Research also shows that annualised quarterly asking rental growth has plunged to near zero for units and has moderated to just over 5% for houses:
Cotality’s weekly market indicators report also shows that the number of homes listed for rent has risen by 8.0% across the combined capital cities, with most capitals recording rises:
Source: Cotality
Thus, after a horrendous five-year period that saw advertised rents rise by around 40% nationally, conditions for tenants are finally improving.
The easing of rental pressures contradicts the fearmongering over the federal government’s changes to negative gearing and capital gains taxes announced in the federal budget, which the property lobby claimed would drive up rents. The opposite has instead happened.
However, the easing in rental conditions likely has nothing to do with the tax changes. Rather, it reflects easing immigration demand alongside affordability pressures, which have driven more tenants into shared living arrangements to cut costs.
By way of comparison, Canada heavily restricted immigration in late 2024, which drove population growth to its lowest level since the Second World War, excluding the pandemic:
This decline in NOM has caused annual Canadian rents to fall for 24 consecutive months, saving the typical Canadian tenant just over $2,000 annually on rent:
Source: Rentals.ca
“Asking rent for all property types in Canada was $2,034 in September, down 4.2% year-over-year, the 24th consecutive month of annual decline. This represented a 9.2% drop from the peak of $2,202 in May 2024”, Rentals.ca reported.
The relationship between Canada’s population growth and rental growth is clear:
The lessons for Australia’s federal government are also clear: if it genuinely wants to ‘solve’ the rental crisis, it should slash immigration, as Canada has done.
