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Prices are the headline. Vacancy rates aren’t — and they’re the number that actually tells you what’s happening to your return. Here’s what five capital cities under 1% actually means for a buy-and-hold decision.
Everyone’s talking about the price downturn. Almost no one’s talking about what’s happening to rents while it plays out.
National vacancy sat at 1.3% in July, according to SQM Research’s weekly data released 18 August — up only marginally from 1.2% a year earlier, and against 40,771 vacant dwellings nationally. That’s not a loosening market. That’s a market that’s still structurally tight, dressed up as a slightly softer headline number.
Look past the national average and it gets sharper. Five capital cities are sitting under 1% vacancy right now: Brisbane (0.9%), Perth (0.6%), Adelaide (0.6%), Darwin (0.3%) and Hobart (0.6%). A healthy, balanced rental market usually runs somewhere around 2-3% vacancy. Every one of those five cities is running at a third of that or less.
“The rental market remains undersupplied, and affordability pressure will stay elevated until stock genuinely increases.” — Louis Christopher, Managing Director, SQM Research, 18 August 2026
A softer sale price and a tightening rental market aren’t in conflict. They’re both true at the same time, and they change the maths differently depending on what you’re actually buying for.
If you’re buying to flip, the price story is the one that matters, and right now it’s a harder conversation. If you’re buying to hold — which is how I structure the overwhelming majority of the portfolios I build — the rental story is doing more work for your numbers than the price story is taking away. A property that yields better from day one carries better through a softer capital growth patch, because the income side of the equation is covering more of the cost side while you wait for the cycle to turn.
This is the part that gets missed in most “should I invest right now” conversations. People ask what prices are doing. They rarely ask what rents are doing. Right now, rents are doing more of the heavy lifting than they have in years.
I sell new construction to investors. New-build stock often does carry a stronger yield profile than established property in the same area — lower maintenance costs eating into the return, depreciation benefits that established stock has largely used up, and in a lot of cases a design and floorplan built for what tenants actually want to pay for right now. But “new build” isn’t automatically higher-yielding on its own. A badly located new-build in an oversupplied pipeline will underperform a well-located established property every time. The vacancy data above tells you where the tenant demand is tight — it doesn’t tell you which specific property in that market is the right one. That’s still a project-by-project call, not a category call.
The vacancy number tells you the market’s tight. It doesn’t tell you whether a specific asset will capture that tightness. Before I put a project in front of a client, I run it through the same five checks every time: the supply pipeline already committed in that specific area, whether population and infrastructure growth is real or assumed, the land-to-asset ratio, the builder and developer’s actual track record, and whether the numbers still hold up if a rate cut doesn’t arrive when everyone’s hoping it will.
A tight rental market makes the yield case easier. It doesn’t replace the due diligence. If anything, a market like this one — where the vacancy story is strong but the price story is soft — is exactly when the due diligence matters most, because it’s tempting to let the good headline number do the thinking for you.
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Book your strategy sessionThey’re driven by different things. Prices respond to buyer demand and finance conditions — both of which have softened this cycle. Rents respond to actual housing supply versus tenant demand, and that supply-demand gap hasn’t closed. The two can and do move in opposite directions at the same time.
No. A national or city-level vacancy figure tells you the broad conditions are favourable — it doesn’t tell you a specific street or a specific building will perform. Yield still needs to be checked at the individual asset level, the same as everything else.
Not automatically. It often has structural advantages — lower maintenance, stronger depreciation, tenant-ready design — but a poorly located or oversupplied new-build project can still underperform a well-located established property. The category doesn’t decide it. The specific asset does.