Key Highlights

  • The national Vacancy Rate has risen to 2.3%, the highest since January 2022.
  • Rents rose just 0.9% over three months, the slowest pace since January 2025.
  • Vacancy rates were higher than a year earlier in every Capital city except Darwin.
  • Softer tenant Demand is seen as a bigger influence than investor selling.

One of the loudest warnings about the federal property tax changes was that investors would flee and rents would surge. So far, the rental market is moving the other way. the November index shows the national vacancy rate has risen to 2.3%, the highest since January 2022, while rents rose just 0.9% over three months, the slowest pace since January 2025. For landlords facing the 1 July 2027 changes, slower rent growth matters for cash flow.

The figures come from the Home Value Index released on 2 November, which covers the month of October.

What the vacancy numbers show

A vacancy rate of 2.3% means a little more than two in every 100 rental properties are listed as available. It is the loosest the national market has been in almost five years.

That is still close to the decade average of 2.4% and well below the pre-COVID decade average of 3.3%, Reports said. In other words, the market has moved from extremely tight towards normal, not into oversupply.

The shift is broad. Reports said vacancy rates were higher than a year earlier in every capital city except Darwin.

Darwin is also where rents are still rising fastest, which suggests the tightest market in the country has not yet felt the same loosening as the larger capitals.

Rent growth is cooling, but not everywhere

The national rise of 0.9% over the three months to October, seasonally adjusted, was the weakest result in 21 months. Over a longer horizon, rents are still up 52% over six years, adding about $245 a week to the national median, according to reports.

Annual rent growth still varies widely between capitals. the figures for houses and units are:

  • Darwin: houses 11.1%, units 11.7%
  • Hobart: houses 9.0%, units 6.2%
  • Perth: houses 7.6%, units 6.9%
  • Brisbane: houses 6.7%, units 6.1%
  • Adelaide: houses 6.3%, units 6.4%
  • Sydney: houses 4.6%, units 3.0%
  • Melbourne: houses 4.4%, units 4.6%
  • Canberra: houses 3.8%, units 1.7%

Research director Tim Lawless suggests tenants are running out of room. "Renters are likely to be approaching a ceiling on their capacity to pay more," he said.

He also said "the loosening in rental vacancy rates and slowdown in rental growth are likely to be related to demand-side factors". That points to affordability limits on tenants rather than a sudden surge in rental supply.

Why the 'investor exodus' argument hasn't shown up yet

Critics of the changes argued that fewer investors would mean fewer rentals and higher rents. Investor activity has indeed fallen: ANZ economists noted "a clear pullback in investor activity in the housing market" on 2 November.

But a pullback in buying is not the same as landlords selling existing rentals. Existing holdings are grandfathered, which removes one tax reason for current owners to sell. Over time, fewer investor purchases could mean fewer homes added to the rental pool, but for now the figures point to softer tenant demand as the bigger influence.

The Reserve Bank has noted the broader cooling. Its November Statement on Monetary Policy says "new housing lending has fallen sharply" and ties weaker housing to both higher interest rates and tax changes announced in the federal budget.

It is too early to treat this as the final word, and the government's own forecasts of the rental impact will continue to be debated. Rental markets respond slowly to changes in investor numbers, and the new rules do not start until mid-2027.

What the 2027 changes mean for a landlord's tax position

The changes are law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, Act No. 49 of 2026.

  • Negative gearing is limited to new builds for residential property bought after 7:30pm AEST on 12 May 2026, applying from 1 July 2027.
  • Property held before that cut-off is grandfathered, so those owners can keep deducting rental losses against other income.
  • An investor who bought an established home after the cut-off cannot use a rental loss to reduce tax on wages or other income from 1 July 2027.
  • The 50% CGT discount is replaced by cost-base indexation plus a 30% minimum tax for gains accruing from 1 July 2027.

For investors in the second group, rent growth carries more weight. Without the ability to offset a loss against salary, every dollar of rent that does not arrive has to be covered from the investor's own pocket.

Hypothetical example: how slower rent growth changes the numbers

Hypothetical example: a landlord rents out a house for $600 a week. The figures are illustrative only.

  • If rent rises 6.7% at the next review, roughly Brisbane's current annual pace for houses, it becomes about $640 a week. That adds about $2,090 a year in income.
  • If rent rises 3.0%, closer to Sydney's pace for units, it becomes $618 a week. That adds $936 a year.
  • The difference between the two is about $1,150 a year in rental income.

For a grandfathered investor whose property runs at a loss, part of any shortfall is still offset by a lower tax bill on other income. For an investor who bought an established property after the 12 May 2026 cut-off, that offset is not available from 1 July 2027, so weaker rent growth would flow more directly into the cost of holding the property.

Rent increases are also subject to state and territory tenancy laws, which set how often rents can be raised and how much notice is needed.

What to watch

These are the next checkpoints for renters and landlords.

  • Early December: the next Home Value Index will show whether vacancy keeps rising through November.
  • December 2026: the Mid-Year Economic and Fiscal Outlook, which will update the government's economic forecasts. No exact date has been published.
  • The Reserve Bank's next decisions, after the cash rate rose to 4.85% on 3 November. Higher rates add to Holding Costs for indebted landlords.
  • 28 November 2026: the Victorian state election, where renting and land tax policies are part of the campaign.
  • 1 July 2027: the start of the negative gearing limit and the new CGT rules.