Rental property saturation in Australia is a significant concern, particularly in major cities such as Sydney and Melbourne. After years of tight supply, new developments and returning investors have flooded the market, giving renters more options and softening demand.
But this isn't a blanket trend. Some suburbs face high vacancy rates, but others have a tight supply and strong yields. This uneven landscape means landlords need to adapt fast. Whether you're in the short-term or long-term market, standing out now requires a sharper strategy, not just a good listing.
Are rentals oversaturated in Australia? The current situation in Australia
Despite population growth putting pressure on available housing, there's still a notable saturation nationwide. As of April 2025, vacancy rates were up 1.3% nationally (up from 1.1%). That uptick comes mainly from key urban centres gaining more listings, which means renters have more choices. Meanwhile, short-term rental demand nationally remains strong, but STR competition in major cities is intensifying. This contributes to the growing saturation of short-term rentals (STRs) in Australia.
Here's a snapshot of April 2025 rental data across capitals:
Oversupply hotspots vs. undersupplied areas
Australia’s rental landscape in 2025 is deeply fragmented. While national vacancy rates hover around 1.1% (SQM Research), this average conceals sharp localised imbalances between oversupplied and undersupplied regions.
Oversupply hotspots: Urban hubs like Docklands (VIC – 4.1%), South Brisbane (QLD – 3.6%), and Zetland (NSW – 3.2%) are experiencing oversupply, driven by high-density developments and a surge of new apartments.
Undersupplied areas: In contrast, outer-metro and regional areas such as Ipswich (QLD – 0.7%), Orange (NSW – 0.6%), and Ballarat (VIC – 0.5%) face tight rental markets.
Why is oversaturation happening in some areas?
A mix of supply shocks and tenant constraints drives oversaturation in 2025:
- Pandemic-era construction backlogs: Projects delayed from 2020 to 2022 are now being completed, especially in high-density precincts.
- Government incentives, such as Build-to-Rent initiatives, have added thousands of new units in inner-city areas, particularly in Victoria.
- Investor FOMO aftermath: Heavy investor buying during 2021–2022 is now flooding rental markets with similar stock.
- Cost-of-living pressure: Stagnant wages and high inflation have reduced tenants' ability to afford premium rents, forcing landlords to compete more on price and value in oversupplied suburbs.
Why landlords are still struggling to fill rentals in 2025
Despite steady rental demand, vacancy rates are rising in holiday and inner-city rentals due to intense competition and shifting tenant expectations.
Key reasons include:
New supply from BTR developments and investor buildings: According to CBRE (2025), over 12,000 BTR dwellings are expected to be delivered nationally this year alone, adding pressure in already saturated inner-urban zones.
Higher tenant expectations on tech, design, and sustainability. Renters are no longer settling for “basic.” In 2025, demand is strong for properties with smart tech and modern finishes.
Savvy renters comparing features, prices, and lease terms. Thanks to digital platforms, renters are now able to easily compare hundreds of properties. The result: landlords unable or unwilling to compete on presentation or pricing see longer vacancies.
Local council or state regulations reducing investor ROI: Local governments in cities like Byron Bay, Sydney, and Hobart have introduced tighter short-term rental restrictions, including 90-day caps and increased compliance requirements. These changes are urging some short-stay landlords to re-enter the long-term market, further crowding supply in already dense regions.
How to still succeed: Effective ways to stand out as a landlord in 2025
With growing STR competition in major Australian cities, success depends on execution. Here are five data-backed ways to boost your ROI:
Your hospitality matters the most
- Add functional upgrades: fast internet, air conditioning, energy efficiency, and modern fixtures matter more than luxury.
- Niche focus is key. If marketing is toddler-friendly, make it real: consider blackout curtains, monitors, baby gates, and other essentials.
- Accept pets and offer flexible terms: demand is high among these segments.
- Prioritise comfort and ease over décor trends.
Modernise your advertising approach
Consider these tips for success:
- Go beyond just listing sites: use social media, video tours, and community groups.
- Use suburb-specific hashtags and SEO-smart titles, such as 'Pet-Friendly 3BR in Brunswick Near Tram 19 – $530/wk.'
- Consider high-quality visuals and walk-throughs to stand out in crowded feeds.
Use competitive, not aggressive, pricing
To stay ahead in the rental market:
- Price slightly (3–5%) below the inflated local averages to fill faster without compromising quality.
- Offer low-cost incentives, e.g., first-month Wi-Fi or early move-in perks.
Target undersupplied markets
The goal here is to focus efforts on tight-demand zones like:
- Perth metro (high STR occupancy, ~84%)
- Regional QLD (e.g. Whitsundays, Sunshine Coast)
- Inner Newcastle (low vacancy, rising demand)
- Adelaide's western suburbs
How do you optimise your rental strategy effectively?
Success in 2025's rental market means staying informed and making data-driven decisions. Try out tools like Beyond's free data tool to help you assess pricing, occupancy, and competitiveness based on your exact property and location.
Whether you're targeting the best STR locations in Australia or managing a rental in a crowded city, insights like these reveal if you're misaligned with current demand.
Beyond's dynamic pricing engine also tracks local trends and seasonality, helping you adjust before your calendar slips behind. Pair this with a clear strategy - strong hospitality, innovative marketing, and fair pricing - and you're better positioned to compete, no matter how saturated the market becomes.
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