Rents soar as councils near big city centres go slow with building approvals, international students move in
Upmarket NIMBY councils near the centre of some of Australia’s biggest cities are going slow on approving new homes during a rent crisis, which a data expert is also blaming on international students.
Australia’s rental crisis is getting worse as international students add to demand and upmarket NIMBY councils near big city centres go slow in approving the construction of new homes, new figures show.
The national vacancy rate tightened to just 1.1 per cent in February leading to a 6.9 per cent annual increase in median capital city rents.
SQM Research is warning of soaring housing costs adding to inflationary pressures in 2026.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.“That is going to feed through into the CPI — probably we’ll see the effect of that in the June quarter,” the group’s managing director Louis Christopher told The Nightly.
“There’s nothing in our data to say that we’re about to see relief in the rental market anytime soon.”
Rental vacancy rates were below 1 per cent last month in Brisbane, Perth, Adelaide, Darwin and Hobart, with Melbourne having the highest vacancy rate of 1.6 per cent.
In Sydney, rental vacancies were still low at 1.3 per cent, as the city receiving the biggest influx of overseas migrants.
The median house rent during the past year has soared by 9.2 per cent to a $1145 a week — or an increase more than double the already high 3.8 per cent inflation rate.
Mr Christopher said any potential move by Treasurer Jim Chalmers in the upcoming May Budget to dilute negative gearing tax breaks for landlords “potentially could” worsen the rental supply crisis as high numbers of international students added to demand for housing in the big cities.
“If they’re here for many months, they’re obviously taking out a rental property,” he said.
“Overall, it’s predominantly driven by demand. We’re still growing in terms of the population, at quite a good clip, when you take into account migration and supply is definitely a contributor, but I strongly disagree with those out there who say, ‘Look, it’s all about supply.’
“It isn’t. It’s a combination of demand and supply.”
During the last financial year, NSW was home to 91,573 new overseas migrants as 24,328 residents moved to another part of Australia, on a net basis.
This meant 67,245 more people moved to the State that is home to Sydney, with departures factored in.
But only 49,237 new homes were approved in NSW during 2024-25, new Australian Bureau of Statistics figures released this week showed.
Wealthy, inner-city councils had some of the lowest building approvals, with just 113 new dwellings at Woollahra in Sydney’s eastern suburbs, and only 152 at the nearby Waverley local government area that covers Bondi Beach.
Mosman on Sydney’s lower north shore had just 48 new residential housing approvals, with former Reserve Bank senior research manager Peter Tulip blaming snobs for the rental crisis near the big city centres.
“Unsurprisingly, the cost of housing in those areas is becoming unaffordable,” the Centre for Independent Studies’ chief economist told The Nightly.
“It’s actually a bit of a puzzle as to why the wealthy areas are the worst NIMBYs.
“You get just disproportionate amounts of snobs and busy bodies in those areas.”
Western Sydney was doing a lot more of the heavy lifting with Parramatta approving 3215 new homes during the last financial year, ahead of Liverpool on 2238.
“Out in the western suburbs of Sydney, for example, I think local residents have a much more tolerant attitude to how their neighbours live,” Dr Tulip said.
Perth is facing a similar problem. Western Australia received 40,406 new overseas migrants and 10,288 new interstate arrivals on a net basis during the last financial year, meaning the mining-rich State had to house 50,694 new people.
During that time, only 22,950 new dwellings were approved in WA.
Perth last month had an ultra-tight 0.6 per cent rental vacancy rate and saw its mid-point house rent climb by 5.7 per cent on an annual basis to $886.50 a week.
Upmarket councils were some of the worst when it came to new dwelling approvals with ritzy beachside Cottesloe approving just 43 new dwellings in 2024-25 as outer suburban Armadale in the city’s south-east approved 1274 new homes.
