Sydney and Canberra ease while smaller capitals stay tight
Whether Australia's rental market keeps climbing or starts to cool will hinge on what spring brings, SQM Research managing director Louis Christopher (pictured) said.
Asking rents are typically firmest between October and January, and Christopher said that if this seasonal lift fails to show up in the larger capitals, "the rental upswing in those cities is over."
That question sits against a national vacancy rate that held at 1.3% in August, unchanged from July, with 41,039 vacant rental dwellings recorded – up around 3,300 dwellings, or 8.7%, on August last year, when the rate sat at 1.2%.
A market moving in two directions
The national figure conceals sharply different conditions city to city, and Christopher said the headline number "hides a market moving in two directions."
Sydney now has 26% more vacancies than a year ago, and Canberra 29% more – the largest annual increases of any capital. By contrast, Brisbane, Perth, Adelaide, and Darwin all recorded fewer vacant dwellings than in August 2025, with each remaining below 1%.
Sydney's vacancy rate held at 1.7%, with the city recording the largest annual increase in available rental stock of any capital. Canberra's rate rose to 2.1% from 1.8% in July – now the highest of any capital city. Perth and Adelaide remain the tightest large markets, both at 0.6%, with Perth's vacant stock down 14% on last year.
Rents flat as the test approaches
National combined advertised rents were flat over the month to 4 September, with house rents down 0.1% and unit rents up 0.2%. The national combined rent now sits at $701.53 a week, with the capital city average at $793.76.
Christopher cautioned against reading too much into the annual rent growth figure of 7.3%, saying "the annual rent figure of 7.3% is history" – a reflection, he said, of increases that have already occurred rather than current momentum.
What's driving supply on the ground
That national picture is playing out alongside a wave of investor selling. PIPA's 2026 Annual Investor Sentiment Survey found 18.3% of investors sold at least one property in the year to August – a record high – with more than half of those sales going to owner-occupiers or first-home buyers, meaning the majority of those properties have left the rental pool entirely.
Fresh modelling adds to the supply pressure at the other end of the market. Analysis commissioned by the Real Estate Institute of Australia and other industry bodies estimates the SMSF property ban will strip almost 2,000 dwellings from the supply pipeline by 2029/30, lifting rents by 0.16 percentage points on its own – part of a combined 1.69% rent increase once negative gearing and CGT changes are factored in, equivalent to around $10 a week.
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