Australia’s rental market continues to face supply constraints, with national vacancy rates falling to just 1% in January, according to SQM Research.

Vacancy rates declined by 0.5% during the month, a period of heightened rental demand as workers and students relocate for the new year.

This leaves only 31,822 rental properties available nationwide, with further tightening expected.

SQM Research managing director Louis Christopher warns that the market remains under severe strain.

“It appeared that vacancy rates were easing towards the end of 2024, suggesting a potential exit from the rental crisis, but that is no longer the case,” he said.

“Vacancy rates have once again tightened to some of the worst levels recorded.”

Hobart’s vacancy rate has dropped to 0.3%, the lowest since SQM Research began tracking data in 2005.

Smaller capital cities are also experiencing significant shortages, with Perth at 0.4%, Adelaide at 0.5%, and Brisbane at 0.8%. Larger cities remain slightly above the national average, with Darwin at 1.1%, Canberra at 1.3%, Sydney at 1.4%, and Melbourne at 1.5%.

Despite the supply crunch, rental price growth has remained subdued. The median weekly asking rent for houses remains at $718, while unit rents have declined by 1.2% to $557.