Australian renters may be seeing the first signs of relief, but new data shows the nation’s housing crisis remains firmly entrenched, particularly across the capital cities where rental availability remains dramatically below pre-pandemic levels.
According to the latest PropTrack figures, the national rental vacancy rate rose to 1.37 per cent in May 2026, the highest level recorded since January 2025. While this suggests a slight easing in conditions, experts warn the increase is coming from an exceptionally low base and is far from enough to restore balance to the market.
The data reveals rental availability across Australia’s capital cities remains 42 per cent lower than it was five years ago, highlighting the severity of the housing shortage and the ongoing challenges facing tenants searching for affordable accommodation.
Darwin remains Australia’s tightest rental market, with a vacancy rate of just 0.77 per cent, followed closely by Hobart at 0.85 per cent. Brisbane sits at 1.01 per cent, Perth at 1.04 per cent and Adelaide at 1.16 per cent. Sydney’s vacancy rate increased to 1.37 per cent, while Melbourne and Canberra recorded the highest capital city vacancy rates at 1.63 per cent and 1.67 per cent respectively.
PropTrack senior economist Luc Redman said while some cities may experience a modest reduction in rental pressures, conditions remain extremely challenging for many Australians.
He noted that cities such as Melbourne and Canberra may see rental growth slow as vacancy rates improve, but renters in Darwin, Hobart and other tightly constrained markets are likely to continue facing rising rents due to limited supply.
The shortage of available housing remains the central issue. Industry experts point to years of underinvestment in housing construction, population growth and limited rental stock as major contributors to the ongoing crisis.
National Shelter chief executive Jackson Hills described the latest figures as a “tentative improvement” rather than a genuine turning point. Housing analysts generally consider vacancy rates between two and three per cent necessary for a balanced rental market, well above current levels in every Australian capital city.
Adding further pressure are rising costs for property investors, including interest rates, insurance premiums, maintenance expenses and regulatory compliance requirements. Some landlords are increasing rents to offset these costs, while others are selling investment properties altogether, reducing rental supply even further.
While regional Australia has shown signs of improvement, with vacancy rates gradually increasing and rental growth slowing, experts say meaningful relief for city renters will depend on significantly boosting housing supply and accelerating the delivery of social and affordable housing.
For now, despite a small increase in available properties, competition for rental homes remains fierce and affordability pressures continue to weigh heavily on households across the country.
