For investors with loans against residential property, and the brokers who arrange them, this changes the numbers. This article sets out what the latest data shows and what it means for serviceability, refinancing and investment strategy.
What the data shows
Cotality's quarterly Rental Review, released today, shows national rents rose just 0.5% in the three months to September. Rent growth has slowed more sharply than in previous quarters.
Annual rental growth eased from 5.9% to 5.5%, and the national median dwelling rent is now $713 a week.
Source: Cotality Quarterly Rental Review, 9 October 2026.
Vacancies are rising. The national vacancy rate increased from 1.7% to 2.1% in September. That is still well below the pre-COVID average of 3.3%.
Domain's data shows a similar picture. Capital city house rents were unchanged at $700 a week over the September quarter, while unit rents rose 1.5%. Sydney house rents recorded a quarterly fall of 0.6% to $835 a week.
Why it's happening
Both data providers point to the same cause: tenants can't afford to pay more. Cotality's research director Tim Lawless said stretched rental affordability and ongoing cost-of-living pressures are increasingly affecting demand, with renters adjusting household sizes and looking for cheaper accommodation. He described renters as reaching an affordability ceiling.
However, Lawless noted that dwelling completions have stayed flat for a long time, so supply constraints remain, and he expects vacancy rates to stay below average over the coming year.
Rents are unlikely to collapse, but the era of rapid, reliable rent increases appears to be over for now.
Why this matters for investors with loans
1. Rising rates without rising rents
The cash rate is now 4.60%. Investors who expected rent rises to cover higher repayments may find the gap is now coming out of their own pocket.
2. Serviceability is tighter
Lenders assess investment loans partly on rental income. Flat rents and higher rates reduce the surplus available to service debt. That affects new borrowing, refinancing and requests to increase existing loans.
3. Vacancy risk is real again
A national vacancy rate of 2.1% is still tight, but it is higher than earlier this year. A property that sits empty for a few weeks between tenants costs more when rates are high. Investors should allow for vacancy rather than assuming 52 weeks of rent a year.
4. Tax settings are changing for residential investors
Changes to negative gearing for residential property mean a loss-making investment can be a bigger cash flow commitment than it used to be. Tax outcomes depend on individual circumstances. See Negative gearing has changed for residential property. Where does that leave commercial?
5. Values and rents are both softening
With home values 5.2% below their March peak, investors face slower rent growth and lower capital values at the same time. That affects LVRs at refinance and the equity available for further investment. See Home values have fallen for six months: what it means for valuations, LVRs and refinancing.
Practical steps for investors
- Use realistic rent assumptions. Plan on today's rent, not last year's growth rate, and allow for some vacancy.
- Stress-test repayments. Check that the property can be held if rates rise again or rent stays flat for a year or more.
- Look after good tenants. In a market where tenants are stretched, keeping a reliable tenant at a fair rent may be worth more than chasing a small increase and risking a vacancy.
- Review your loan structure early. If a fixed rate is ending, an interest-only period is expiring or a refinance is due, start the conversation well before the deadline.
- Keep a cash buffer. Repairs, vacancies and rate changes are easier to handle with reserves than with emergency borrowing.
What brokers should consider
For investor clients, the conversation has shifted from growth to resilience. Brokers can help by:
- reviewing portfolios for loans with high LVRs or thin rental cover
- identifying upcoming fixed-rate expiries and interest-only conversions
- planning refinances while serviceability and valuations are still workable
- considering whether short-term or bridging finance can help an investor sell a property in an orderly way, rather than under pressure. See Bridging finance explained.
The bigger picture
The rental slowdown isn't a crisis for landlords. Vacancies are still low by historical standards, and limited new supply should keep rental demand firm. But it does mark a shift. Investment property returns now depend more on careful structure and realistic assumptions than on rising rents.
The Funding Door view
Investors who plan for flat rents, higher rates and realistic valuations are well placed to hold good assets through a softer period. The key is a loan structure that suits the property's actual income, not the income it might earn in a stronger market.
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Submit Your Scenario →Funding Door Pty Ltd (ACN 638 679 964) provides finance for business and investment purposes only. This lending is not regulated credit, and consumer protections under the National Credit Code do not apply. This article is general in nature, does not constitute financial, credit, tax or legal advice, and does not take into account your individual objectives, financial situation or needs. Tax outcomes depend on individual circumstances; Please seek independent professional advice before acting. All lending is subject to credit assessment, valuation, due diligence and formal approval.