Hard time for renters as landlords squeeze tight market
Australian renters continue to struggle to find homes despite vacancy rates slowly improving from post-COVID lows.
Vacancy rates in Australia’s capital cities and territories remain below two per cent and rental competition is expected to remain strong, according to a report.
High interest rates could slow investor activity in 2026, while tight rental market conditions mean rental costs will continue to rise, according to the PropTrack Westpac Investor Report 2026.
REA Group senior economist Angus Moore said property investors had been active in recent years, with new investor loans rising by 64 per cent from the lows in 2023.
“On top of that, house prices continued to rise, meaning the share of investor sales that recorded a profit was the highest in at least a decade,” he said on Thursday.
Only seven out of every 100 investor sales failed to turn a profit in the last few months of 2025; This is the highest level in more than a decade.
House price growth in Brisbane, Adelaide and Perth has been phenomenal; Prices in these cities have more than doubled since 2020.
Although investor demand for properties in the southern capital has increased again, house prices have risen the slowest in Melbourne, rising just over 20 per cent in the past six years.
Investors were particularly active in NSW, accounting for 44 per cent of home loans; this rate was 37 percent in 2022 and 29 percent in late 2020.
In Western Australia, South Australia and Queensland, investors accounted for 40 per cent or more of total loans.
Westpac chief economist Luci Ellis said it was likely to be a tough year for Australia’s housing market, with higher interest rates limiting property price growth and the Middle East war adding an extra layer of uncertainty.
“From an RBA policy perspective, this makes it difficult to assess how the upside risks to inflation compare with the downside risks to growth,” Ms Ellis said.
“But the already very stretched starting point for prices for housing means higher interest rates will put pressure on affordability and buyer sentiment.
“We expect price growth to cool to a more muted 5 per cent increase nationally in 2026, falling to less than eight per cent in 2025, with a more pronounced slowdown in ‘hot’ markets such as Brisbane and Perth.”
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