Rents to soar as new data reveals hundreds of rental homes vanish weekly

Australia’s already strained rental pool has been shrinking since major housing reforms were announced in the May budget and the rising competition for homes is expected to spark more rent hikes.

Exclusive analysis by research group FoundIt of more than 760,000 property listings showed a stock shortfall was emerging, with only 61 new rentals coming to market for every 100 rentals sold since budget night.

About 10,100 rented homes were sold in the first seven weeks since the budget – the latest period with available data – but just 6140 new rentals were purchased and listed up for lease over the same period.

This meant the country was losing about 570 rental homes per week nationally, according to the FoundIt analysis of the G-NAF, the Commonwealth’s official database of residential addresses.

The study noted the number of landlords selling rental homes was lower than over the same period last year, but this was being paired with a significant drop in the rate of new landlord purchases.

ABS data revealed a similar trend, with the number of investor loan commitments for dwellings falling 8.6 per cent in the June quarter, marking the largest quarterly decline in investor lending in four years.

FoundIt head of research Kent Lardner said there were simply not enough investors buying homes to replace those getting sold. This, coupled with rising tenant demand due to migration, was putting pressure on rents.

“Replenishment is stuck at 61 homes for every 100 that leave. A rental pool can shrink just as fast through the taps as through the drain,” Mr Lardner said.

Shadow minister for housing Angus Bragg said it wasn’t surprising the budget was driving down rental supply.

“Labor has killed the incentive for private investment in the rental market,” Mr Bragg said. “Its new taxes will drive supply even lower.”

He called on the government to be more transparent about the modelling it used to measure the impact of its budget policies such as restrictions on negative gearing.

“Labor said it would be a $2 impact on rents per week in the Budget, but they won’t say how they came up with this figure,” Mr Bragg said.

“Labor was warned this would happen and pressed ahead anyway. Rather than building the homes Australia needs, it has chosen an ideological attack on private investment that will hurt renters.”

A spokesperson for Housing Minister Clare O’Neill defended the policies by claiming more renters were becoming first-home buyers.

“Our reforms are getting more renters into homes of their own with less competition from investors,” they said.

“All Australians who were negatively gearing an investment property before the Budget won’t see any change to those arrangements.

“Investors who have purchased a home after the Budget can access negative gearing up until 1 July next year.”

FoundIt revealed Australia’s rental market also shrank over the same period last year – but for a different reason: more investors were exiting the market because of reforms in Victoria, while others were cashing out on huge equity gains made during the pandemic.

Mr Lardner said introducing policies that would shrink the market even further should have been approached with caution – especially considering current levels of tenant demand.

He pointed to ABS stats that showed Australia’s population grew by about 34,000 people a month in the year to December 2025, three-quarters of it through overseas migration.

Meanwhile, net permanent and long-term arrivals in the 2025/26 financial year were 476,870 – higher than any financial year on record.

Accommodating population growth at this pace required 5500-7000 new rental homes a month, before replacing a single rental that leaves, Mr Lardner said.

“Rents will very likely go up,” said Junge Ma, research analyst at InvestorKit.

“Tenant demand could rise because we are seeing strong population growth, strong migration and unemployment is low, plus on the sales side, rents remain a lot more affordable than purchase prices.”

Buyer’s agent James Thompson of Rethink Residential said would-be landlords were holding off buying properties because of a mix of uncertainty and borrowing changes from the loss of negative gearing.

He noted that banks had already factored the loss of the tax benefits into its assessments of investors’ borrowing power, leaving many unable to enter the market.

“It’s common to see investors who lost up to 40 per cent of their borrowing power,” he said. “That’s pushed many totally out of the market, or if they are buying, it’s in cheap regional areas.

“It’s also the uncertainty that’s killing people. In the past, when you have things like higher interest rates, buyers can adjust. But when they’re unsure about what’s going to happen, investors don’t want to enter the market.”

Investor Sam Coert said she quickly had to back out of two real estate deals she had already signed after her borrowing power more than halved after budget night.

She had been approved for two $700,000 loans, but overnight banks told her she could only borrow $450,000 for one home because of negative gearing being removed from lending calculations.

Backing out of contracts meant she lost thousands. “I never intended use negative gearing,” she said. “It was a surprise the changes still affected me. I had no idea the government moves would do this to me.”