Clear Solutions Emerge for Rental Crisis
Australia’s ongoing rental crisis has sparked concern among economists and citizens alike. A recent analysis by independent economist Gerard Minack highlights immigration as a primary factor driving this situation. Following the reopening of Australia’s borders in late 2021, net overseas migration surged, resulting in increased rental demand.
Impact of Population Growth on Rental Prices
Between the fourth quarter of 2021 and the second quarter of 2025, Australia experienced an influx of nearly 1.5 million migrants. This rapid population growth has led to a staggering 31% increase in advertised rents nationwide since the end of 2021. According to Cotality, this spike has added approximately $8,500 to the annual renting cost for the median tenant.
Current Rental Market Trends
- Advertised rental growth has reached 5.5% annually.
- Rental vacancy rates are nearing historical lows.
- Affordability is at record-low levels for tenants.
The ongoing tightening cycle initiated by the Reserve Bank of Australia contributes to the slow pace of housing construction. Unless the federal government makes substantial reductions to immigration levels, the rental market will remain constrained.
Comparative Analysis: Canada and New Zealand
To understand potential solutions for Australia, examining the rental markets in Canada and New Zealand is instructive. Both countries have implemented measures to slow net overseas migration significantly.
- Canada has seen 15 consecutive months of declining annual asking rents, with a median drop of 6.5% from its mid-2024 peak.
- New Zealand reported a decrease in rents in 2025, helped by a 12.8% year-over-year increase in rental listings, reaching a decade-high of 7,224 homes.
Lessons from Canada and New Zealand
The recent changes in rental prices in these countries underscore the correlation between immigration levels and housing market stability. Both Canada and New Zealand have improved their housing supply, thereby easing rental pressures on their residents.
In summary, addressing Australia’s rental crisis may require a reevaluation of immigration policies to permit sufficient time for housing supply to align with demand. This straightforward adjustment could lead to a more balanced rental market in the future.
