Australia’s rental market remains tight, but the latest Cotality Housing Value Index suggests change may be on the horizon. While demand still outweighs supply in many regions, a subtle rebalancing is underway, and landlords are being encouraged to stay informed and flexible. 

According to the August 2025 Index, national dwelling values rose 0.6% in July, continuing a steady upward trend. For landlords, this modest growth supports asset values and underpins long-term capital gains. However, it’s the rental sector’s trajectory that now requires closer attention.

Although rental vacancy rates remain low, particularly in Perth, Brisbane and Adelaide, conditions are gradually diverging between regions and dwelling types. Cotality reports a continued slowdown in rental growth rates in Sydney and Melbourne, with the pace easing as more supply flows into the market. Some inner-city areas are beginning to see the return of rental incentives or rent negotiations, particularly for high-density apartments.

This softening doesn’t signal weakness, but rather stabilisation–a welcome shift after years of disruption. In good news for tenants, the days of rapidly rising rents may be over in some areas, and tenant retention strategies will become more important for landlords through 2026.

Despite this, pressure remains in outer suburban and regional rental markets. Population growth, restricted housing supply, and low levels of new development have kept vacancy rates well below historical norms. These areas may continue to see stronger rental performance, although affordability concerns are becoming more pronounced.

Responsible landlords are already thinking beyond the short term. Many are investing in property improvements to enhance energy efficiency and liveability, helping retain quality tenants while reducing future maintenance costs. In a market where tenants have more information and higher expectations, well-maintained properties tend to attract lower vacancy periods and more stable tenancies.

From a capital growth perspective, Cotality’s data highlights continued strength in the smaller capital cities. Perth values rose 0.9% in July, Adelaide 0.7%, and Brisbane 0.7%–each outperforming the national average. This is of particular interest to investors weighing up regional diversification or expansion of their portfolios.

However, landlords should also be conscious of evolving regulations and community expectations. With rental affordability a pressing issue across much of the country, state governments are actively reviewing tenancy laws. Many changes focus on security of tenure, notice periods, and minimum standards–all of which affect how investment properties must be managed.

Landlords who remain adaptable, proactive, and well-informed are best placed to navigate this phase of the market. Rental yields remain attractive in many locations, particularly where property values have stabilised and rents have continued to rise, but a long-term view is essential.

Overall, the Cotality report reinforces that while conditions remain favourable for landlords in many respects, the balance between sustainable returns and tenant affordability is becoming more important. Those who act with foresight and fairness are more likely to enjoy reliable income streams, positive tenant relationships, and stronger portfolio performance.

Gross rental yields nation