The percentage of rental properties available in Australia is at its lowest level since before the start of the COVID-19 pandemic, with data showing the rental market has tightened significantly in capital cities and regional parts of the country.
Newly released data from the PropTrack Market Insight Report shows the national rental vacancy rate fell by 0.1 percentage points in February, taking it to 1.47 per cent — the lowest rate since late 2018.
The rental vacancy rate in capital cities currently sits at 1.43 per cent, having fallen by 0.14 percentage points in February, pointing to a rapid tightening of the rental market.
In regional Australia, the rental vacancy rate is marginally higher at 1.58 per cent, meaning it is now more difficult for renters to find a property in capital cities compared to the regions since before the start of the pandemic in March 2020.
Nationally, rental vacancy rates have fallen by 0.6 percentage points in the past year, a pattern observed in rental data since early 2021.
PropTrack's senior economist Paul Ryan said the data proved what many Australians were already acutely aware of — with a vacancy rate below 2 per cent, the rental market was "extremely tight".
"We've seen rental markets continue to tighten, and now we've got the national rental vacancy rate below 1.5 per cent," he said.
"That's half the level we saw before the pandemic so, roughly speaking, that's half the number of available rentals as there was before the pandemic.
"It's really difficult to find a rental, and rental prices are going up incredibly quickly, so that's our expectation for the rental market this year, which is really bad news for a huge number of Australians."
What do rental vacancy rates look like around the country?
Perth is considered to have the tightest rental market in the country, with the West Australian capital having a vacancy rate of just 0.85 per cent according to PropTrack — a reduction of 69 per cent since March 2020.
The latest figures from the Real Estate Institute of WA showed a rental vacancy rate of 0.7 per cent, having fallen to 0.6 per cent in December.
Adelaide has the second-most competitive rental market with a vacancy rate of 0.92 per cent, which has dipped by 45 per cent since the start of the pandemic.
Every other capital city has a vacancy rate of more than 1 per cent, with Darwin the only city to have a vacancy rate of greater than 2 per cent — however every capital city has seen a reduction of at least a third since March 2020.
Hobart was the only capital city to see an increase in its rental vacancy rate in February, although it was marginal at just 0.06 percentage points.
Mr Ryan said there has also been a noticeable surge in demand for rental properties in Sydney and Melbourne, with both capitals seeing a tighter rental market over the past year.
"Sydney is down one percentage point, and Melbourne's down 1.8 percentage points over the past 12 months," he said.
"Melbourne's vacancy rate has more than halved over the past 12 months, so it shows just how tough conditions have gotten."
Outside of the capital cities, regional South Australia has the tightest rental market in the country at 1.08 per cent, followed by Tasmania and Victoria at 1.28 per cent and 1.30 per cent respectively.
Every other regional area in Australia has a vacancy rate greater than 1.5 per cent, with the exception of the Northern Territory, which sits at 2.8 per cent.
Mr Ryan said in the capital cities and regional areas where the vacancy rate was below 1 per cent, properties were being rented "instantaneously".
"Rental vacancies across the country are really tight," he said.
"There's really no markets where you would consider it easy to find a rental.
"That's the unfortunate reality at the moment."
When will things improve?
Unfortunately there is no relief in sight for renters any time soon — at least, not until there is more housing supply.
Mr Ryan said demand for rental housing was continuing to outstrip supply, or the number of homes available for rent, meaning conditions were likely to ease as more houses were built.
"The main way that we restore balance in the rental market is building more homes, which takes a long time to come to fruition, and … there are supply constraints," he said.
"I don't think we're likely to see broadscale easing or signals that rentals are easier to get [soon], and rental prices are going to keep growing at a strong rate.
"Unfortunately in the short term, these conditions are going to be difficult for a lot of renters out there."
But with rental prices continuing to climb, Mr Ryan said that could indirectly result in increasing housing supply.
"Another adjustment that we expect to see is probably — not necessarily all — of the people who moved into their own space during the pandemic will unfortunately find them too expensive as rents increase, and they'll look to share again with other people," he said.
"That could unlock some potential supply.
"It isn't the greatest solution to that problem, but I think we're definitely going to see more of that over the next year as well."
