‘Last thing tenants need is policy that reduces investment’

A NEW report has shown property prices have risen across most Australian capital cities, while rental vacancy rates have fallen to low levels.

The Real Estate Institute of Australia’s latest Real Estate Market Facts report highlights a market under sustained pressure from both sides.

REIA president Jacob Caine said the results show prices rising on the back of persistent demand and rental conditions tightening at a pace that is leaving tenants with fewer options and higher costs.

“The national median house price increased 2.2 per cent over the March quarter to $1,146,864, representing the highest annual increase of 12 per cent since March 2022,” Caine said.

“Darwin, Perth and Brisbane led quarterly gains, while Sydney, despite a modest quarterly decline of 0.6 per cent, remains the most expensive city in the country at a median house price of $1,550,000, which is 35.2 per cent above the national median.”

Other dwellings recorded their highest annual price increase since June 2014, rising nine per cent nationally over the year, with Adelaide (6.6 per cent), Brisbane (5.4 per cent) and Perth (5.4 per cent) recording the most substantial quarterly gains.

The national weighted vacancy rate fell to 1.7 per cent over the March quarter, well below the three per cent industry benchmark
that signals a balanced market. Brisbane and Adelaide recorded vacancy rates of just 0.7 per cent.

The report showed national median rents for three-bedroom houses rose two per cent over the quarter to $643 per week, with increases recorded across most capital cities.

For two-bedroom other dwellings, the national median rent increased 3.7 per cent to $674 per week, with increases across all capital cities ranging from 1.7 per cent in Melbourne to 5.3 per cent in Sydney.

Caine said the rental figures must be read alongside the joint independent modelling released following the 2026–27 Federal Budget, which shows proposed changes to negative gearing and capital gains tax concessions could push rents up by as much as $9 per week over the next four years.

“In a market where vacancy rates are already at crisis levels, and rents are rising every quarter, the last thing tenants need is policy that reduces the incentive for private investors to provide rental housing,” Caine said.

“Private investors supply the overwhelming majority of Australia’s rental stock. Reducing the tax competitiveness of residential property investment in a supply-constrained market will reduce the number of properties available to rent, drive vacancy rates lower still and push rents higher.”

Caine said the findings of the March quarter report reinforce the need for policy settings that support housing supply and private investment, not undermine them.

“Addressing Australia’s housing challenge requires more homes, not fewer investors. Strong dwelling completions and stable tax settings that encourage investment are the foundations of a rental market that works for tenants,” Caine said.