In Data We Trust

Rental Crisis


Everyone has heard of the rental crisis by now. It has been looming for a few years. But how bad is it really and where is it going to get even worse?


The sign of a balanced market is where demand from renters matches supply from landlords. This is reflected in a vacancy rate of 2%. How do I know it is 2%?

I analysed historical data and calculated the vacancy rate when rents grow in line with inflation.

I noticed that when vacancies drop below 2%, rents rise faster than inflation. And when vacancy rates are above 2%, rents grow slower than the rate of inflation.

Here is a link to that research…

Is 3% vacancy really a balanced market?

We can therefore say that any area with a vacancy rate under 2% is a headache for renters and is good for landlords.

The national vacancy rate is currently a bit over 0.7% – very low.

Worst Place to be a Renter

The following areas are some of the worst places in the country to be a renter looking for new digs.

These median vacancy rates are less than half the national vacancy rate.

Best Places to be a Renter

At the opposite end of the vacancy rate spectrum, we have some of the best areas to be a renter.
These areas are not a renter’s paradise. Vacancy rates are still well under 2%. So, they are not ‘good.’ They just aren’t as bad as everywhere else.

Recent Rental Growth

The following table contains areas that have seen the most rental growth in the last 12 months.
Imagine your property manager recommending a rental increase from $400/week to $480/week!

Future Rental Growth

The following table contains best guestimates for the areas most likely to have high rental growth in the next 12 months.

More than half are in QLD.

They were chosen for:

· Low vacancy

· Less than average recent rent growth

· Respectable demand relative to supply (DSR+)

I expect 12-month rental growth in these areas between 15% and 25%.

Note that these are not the best investment areas for investors. Some have poor growth prospects, and some have low yields.


Some renters in Brisbane have suggested the property market is broken in some way. Rents for houses in Brisbane have risen over 15% in the last 12 months. However, this is merely a catch-up for a long period of growth slower than inflation. Brisbane rents have grown at only 1.3% per annum for the decade to August 2020, which is when they took off. I noticed an interesting chart in an article by Core Logic’s Eliza Owen that supports this catch-up concept…

There is not much we can point to in Australian property that has become more affordable every year for over a decade.

Core Logic and the Australian National University put that chart together. You can read Eliza’s full article here…

The Brisbane Rental Crisis in 5 Charts

The rapid rise in Brisbane rents recently is not a sudden problem that needs fixing. It is a sudden fix to a problem that had been building for over a decade.


What is it to come?

Brisbane’s rent affordability has only just got back to where it was in 2008. On top of that, vacancy rates are still way below 2%. So, there is plenty more rent growth to come. And not just in Brisbane.

But do not worry, eventually:

1. Investors will enter the market, lured by higher yields

2. And renters may find it more feasible to own than rent

3. So, buyer demand increases

4. Developers respond, supplying to the demand

5. The extra supply cools the market and restores balance

6. Then there is a period of low growth before the cycle repeats



Property markets move in response to supply and demand imbalances. Imbalance does not mean the system is broken. Supply and demand are simply playing their centuries old game of tug-o-war.

Commentary by


Director of Select Residential Property
Founder of DSR Data

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