Australia's rental vacancy rate hits a new record low: what it means if you're saving for a deposit

Australia's rental market just tightened again. Cotality's latest Quarterly Rental Review shows the national vacancy rate has fallen to a new record low of around 1.47%, less than half the pre-COVID decade average of roughly 3.3%. At the same time, national rents rose approximately 1.4% over the September quarter, the fastest three-month pace in about two years. For anyone renting while they save a deposit, that combination of scarce vacancies and accelerating rents is worth understanding, because it directly affects how much you can put aside each month.

Why vacancies keep tightening

The shortage is not evenly spread, but it is widespread. Sydney recorded a new record low vacancy rate across both its unit sector and its broader rental market in September, and rental listings nationally are tracking around 25% below the previous five-year average for this time of year. When there are fewer properties available relative to the number of renters looking, landlords have more room to lift asking rents, and that pressure shows up fastest in the tightest cities.

Annual rental growth also picked up pace, rising to around 4.3% over the year to September, up from a four-year low of about 3.4% recorded over the year to May. Brisbane and Sydney led the acceleration, while Adelaide was one of the few markets where annual growth eased. This is not a uniform national story, so what is happening in your own city or suburb matters more than the national average.

The deposit-saving squeeze

• Rising rent competes directly with deposit saving. A weekly rent increase of even a modest amount, on top of an already tight budget, can meaningfully slow down how quickly a deposit target is reached.
• Tight vacancy means less bargaining power. With national vacancy near record lows, renters generally have fewer alternative properties to move to if a lease renewal comes with a steep increase, which can make it harder to negotiate.
• The gap between renting and buying costs is shifting. As rents rise faster and property price growth remains subdued in many markets this year, the relative cost comparison between continuing to rent and buying sooner is worth periodically re-checking rather than assuming it is unchanged from last year.

What this means for first home buyers

A record-low vacancy rate is a signal, not a verdict on what you should do. It does not tell you whether buying now is right for your circumstances, but it is a useful prompt to revisit your numbers rather than assume things have stayed the same since you last checked.

• If your rent has recently increased, work out how much less you are able to put toward your deposit each month and adjust your savings timeline accordingly.
• Check whether the First Home Super Saver Scheme still makes sense for your situation. Rising rents can make the tax-effective saving path inside superannuation more attractive for some savers, though it will not suit everyone.
• If you are close to a deposit target, it may be worth comparing the ongoing cost of renting in a tightening market against the cost of buying sooner, including with a low-deposit scheme, rather than waiting for conditions to ease on their own.
• Speak with a mortgage broker or lender about your options if rising rent is affecting how much you can save. A professional can walk through scenarios specific to your income and expenses that general information like this cannot cover.

Run the numbers

Rather than guessing how the rental market squeeze affects your own plans, it is worth testing your specific situation against these tools:

• Rent vs Buy Calculator - compare the real cost of continuing to rent against buying now, using your own rent, savings rate and target property price
• FHSS Calculator - see how much faster you could build a deposit using the First Home Super Saver Scheme if rising rent is slowing your savings
• Borrowing Power Calculator - check how much you may be able to borrow based on your current income and expenses, including your rent