Rental Market Shows First Real Easing Since 2023
For the first time since the post-pandemic rental crunch began, there are concrete signs of easing on the supply side. SQM Research’s latest weekly data puts Melbourne’s vacancy rate at 1.8% and Sydney’s at 1.5% — both up roughly 30 basis points from the January lows and the first time the metro-wide number has moved meaningfully off record floors.
It’s not a boom in listings. But after three years of asking rents growing faster than wages, any directional shift matters.
What’s Driving the Shift
Three forces are layered on top of each other:
- Investor sell-offs. Every quarter-point of mortgage rate increase pushes more leveraged landlords toward the exit. CoreLogic’s April investor-sales share hit 38% of all resale transactions — well above the 10-year average of 29%. Most of those stock the market as owner-occupier listings rather than re-entering the rental pool, but the ones that do re-enter come at softer asking rents.
- Apartment completions. A wave of inner-city projects greenlit in 2022–23 is finally settling. Melbourne Docklands, Box Hill, and Southbank have all absorbed new stock in March–April, with a further ~3,400 units expected to settle across Melbourne and Sydney CBDs by end of Q2.
- Softer migration intake. Net overseas migration has moderated from the 2023–24 surge. The 2025–26 intake is tracking toward ~350k, compared with 518k in 2023–24, giving the rental market room to catch up.
Where Relief Is (and Isn’t) Showing
Real relief is uneven. Inner Melbourne and Sydney CBD apartments have seen median asking rents drop $15–$30 per week since March. Houses across both capitals remain essentially unchanged — family formation demand is much stickier and supply there isn’t moving.
- Melbourne — median unit rent now $580/wk (down from $595 in Feb); house rent unchanged at $680/wk
- Sydney — median unit rent now $720/wk (down from $735); house rent steady at $880/wk
- Brisbane, Perth — vacancy rates still below 1%, asking rents still rising 0.3–0.6%/month
- Adelaide, Hobart — sub-1.2% vacancy, tight rental markets continue
What It Means for Each Persona
- Renters — marginal negotiating power has returned in metro unit markets. Expect landlords to accept rent holds or even small drops on renewals, particularly for apartments in Docklands, Southbank, Macquarie Park, and Chatswood.
- Investors — softer rental growth combined with higher holding costs is squeezing gross yields. Net yields in Melbourne units are now averaging 3.1%, down from 3.4% in Q4. Expect portfolio pruning to continue.
- Buyers — more ex-rental stock on market widens choice in the $600–$900k segment. Well-priced inner-unit listings are attracting first-home-buyer attention rather than the investor competition that dominated 2024.
What to Watch
If May brings another RBA hike, expect investor selling to accelerate further and vacancy rates to tick higher still. If the RBA holds, the easing may stall — investors will hang on longer and some ex-rental stock will flip back into the rental pool.
Either way, the rental crunch narrative of 2023–2025 is materially changing shape in the metro apartment segment. It’s the first genuine good news renters have had in three years.
