Australians have been feeling the pinch for months — higher grocery bills, costlier fuel, and especially rising rents. Now, new data has revealed the real reason behind the rental surge, and it’s not just about supply and demand.
The Hidden Forces Driving Up Rents
According to analysis from PropTrack, Australia’s population boom has been a key factor behind soaring rents, with record levels of migration adding pressure to an already tight housing market. The report found that while construction is lagging far behind demand, population growth has surged — pushing rental vacancy rates to historic lows.
Economists say that since the pandemic, the number of rental properties available has plunged, while the number of people seeking them has risen dramatically. Cities like Sydney, Melbourne, and Perth have seen some of the fastest rent increases in decades, leaving many tenants struggling to keep up.
PropTrack senior economist Eleanor Creagh said the imbalance between supply and demand remains the biggest driver of rent increases, but added that broader factors — including government migration policies and sluggish building activity — have made the situation worse.
Supply Falling Short
The report shows that new housing approvals remain well below pre-pandemic levels, despite record demand. Construction costs, land shortages, and labour constraints have slowed building projects across the country.
With fewer homes being built and population growth surging, the rental market has become a pressure cooker. Vacancy rates are sitting below 1% in most major cities, meaning competition for available properties is fierce, reports Yahoo Finance
Many renters are now being forced to make compromises — smaller homes, longer commutes, or sharing with more people. In some inner-city suburbs, weekly rents have jumped by more than 20% over the past year alone.
A Long Road to Balance
Experts say the problem won’t be fixed overnight. While the federal government has announced plans to build 1.2 million homes over the next five years under its Housing Accord, industry groups remain sceptical about whether the goal is achievable given current conditions.
Developers cite high interest rates, planning bottlenecks, and workforce shortages as barriers to ramping up construction. Without major reform, economists warn, rents will remain elevated well into 2026.
Renters Feel the Strain
For tenants, the strain is both financial and emotional. Many are cutting back on essentials or moving further from work to afford housing. Advocacy groups have called for more immediate relief — such as rental assistance increases and stronger tenancy protections — to help renters cope in the meantime.
For now, the trend is clear: Australia’s rents are still rising, and without faster housing growth, the end of the squeeze remains a long way off.
