The claim that property rents would spike in response to the federal budget’s changes to negative gearing and capital gains tax has aged like milk, with new data from Cotality instead showing that rental growth is moderating amid rising vacancy rates.
National rents grew by 5.7% in August, according to Cotality, down from 5.9% over the three months prior.
The national rental vacancy rate also rose to 1.9% in August, the highest reading since January 2025.
The following chart from Cotality shows that the decline in rental growth nationally has been driven by Sydney (5.3%), which also has the highest rental vacancy rate among the mainland capital cities at 2.2%:
Source: Cotality
Realestate.com.au’s rental data also showed that the vacancy rates hit 1.5% in July, the highest level since February 2022:
Source: Realestate.com.au
While rental vacancy rates have risen, they remain well below the 2.5% to 3.5% range considered a balanced market or the pre-COVID decade average of 3.3%.
Thus, renters still face a challenging situation, even as conditions improve.
Essentially, the market remains very tight, but slightly less tight than before. As a result, rents are growing more slowly, but still significantly faster than wages.
Ultimately, the decline in rental growth has little to do with the federal government’s changes to negative gearing and capital gains tax and mostly relates to the slowing of immigration and tenants hitting an affordability ceiling.
The solution to the rental crisis, therefore, involves following Canada’s approach and slashing immigration:
