February 17th, 2026
Investors are borrowing more than ever to secure a slice of the Australian property pie
Market insights
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Key points
- The national vacancy rate has fallen back to 1.2%, showing that rental supply remains limited in most cities.
- National combined rents have lifted 2.2% over the past month to $683.26 per week and are 7.3% higher than a year ago.
- Tight markets such as Perth (0.6% vacancy), Brisbane (0.9%) and Hobart (0.4%) continue to point to strong tenant demand and low availability.
If you own an investment property or are thinking about buying one, numbers that come out after the holiday period usually offers a clearer view of rental demand.
The summer lull has passed, tenants are back in the market and available properties are being leased quickly. The bigger picture shows a rental market that remains firm, even after a brief seasonal pause.
Here’s what that means for investors heading into 2026.
Vacancy rates tighten as the market resets
The national vacancy rate fell to 1.2% in January, according to the latest data from SQM Research, down from 1.4% in December. Around 37,630 homes were sitting empty across the country. Much of the extra stock that came online over summer has now been leased.
All capital cities except Hobart became tighter again. In Sydney and Melbourne, the brief lift in empty homes over the holidays has already been absorbed. Interestingly, Sydney, Melbourne and Canberra are the only capital cities with vacancy rates above 1%. Even Melbourne, which long had the most balanced market is tightening rapidly, with its number of vacancies dipping below 10,000 in January.
Rental options remain extremely limited in cities where less than 1% of homes are available: Brisbane, Perth, Adelaide, Darwin and Hobart.
Hobart remains the tightest market in the country. With vacancy at just 0.4%, only 112 homes were available for rent.
The pattern is clear. Listings often build up in December as people move or delay decisions over the break. But once January arrives and tenants return to the market, those homes are taken quickly. The broader supply shortage has not gone away.
Rental values regain upward pressure
As vacancy tightened, rents began to lift again. National combined rents rose 2.2% over the past 30 days to $683.26 per week. Over the past year, rents are up 7.3%.
House rents were mostly steady over the month but still sit 7.5% higher than a year ago at an average of $762.00 per week. Unit rents edged higher over the month and are 6.9% above last year, with the national average at $592.00 per week. This suggests many renters are still looking for more affordable options.
Across the capitals, most markets saw rents move higher in January. Sydney (1.7%) and Melbourne (2.2%) both recorded monthly gains respectively as demand picked up after the break. Hobart, Darwin and Brisbane showed the strongest annual growth at 10.1%, 9.4% and 8.5% respectively. Even in cities where monthly growth was small, rents remain well above year-ago levels.
When vacancy is low, rent pressure tends to return quickly. January’s data shows that once the holiday pause ends, the market goes back to being driven by limited supply and steady tenant demand.
Sam Tate, SQM Research’s Head of Property, expects rents to keep going up in the next few months.
“Unless we see a meaningful increase in new rental supply, upward pressure on rents is likely to persist through the first half of 2026,” Tate said.
What this means for property investors
The January reset shows that rental demand remains very high in most parts of the country. The supply gap is keeping vacancy low in many cities, which points to strong tenant competition. For investors, this supports stable income, but it’s a good idea to work with your Property Manager to review rents strategically.
Disclaimer: The information enclosed has been sourced from SQM Research and is provided for general information only. It should not be taken as constituting professional advice.
PropertyMe is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
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