‍Rates up. January busy. Fundamentals intact.

The market feels unsettled, but the data suggests this is seasonal churn, not a structural shift.Tenants may appear more selective briefly, but not a shift in fundamentals. 

Here’s what matters right now.

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🕒 The 60-Second Snapshot

• Interest rates are higher again.  The Reserve Bank of Australia lifted the cash rate by 25 basis points to 3.85% at its first meeting of 2026, following a December CPI print of 3.8% year-on-year. 

• Vacancy remains tight, despite a seasonal lift.
  National vacancy rose to 1.4% in December 2025, reflecting summer turnover rather than a structural increase in supply. Demand is still there. 

• Rent growth is slowing, not stopping.
  Domain’s December 2025 Rental Report shows annual rent growth has slowed, but is still growing. Affordability pressures increasingly shaping outcomes by location and dwelling type. 

• Housing costs continue to drive inflation.
  The ABS CPI for November 2025 shows rents and other housing costs remain a material contributor to inflation. Rental income remains critical, but tenants are more price-aware. 

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So what: Higher rates have raised the cost of holding property, but tight vacancies continue to support rental income. Rewards will come from disciplined pricing and cashflow management, not aggressive assumptions.

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📈 Market Pulse: What the coverage is really saying

Across the latest data, consistent message: tighter conditions, momentum, but slower.

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• Could shorter ‘Co-Living’ leases ease rental supply pressures?
  REA Insights explored co-living rental sector where short, flexible leases and all-inclusive pricing attract tenants priced out of traditional rentals. With supply forecast to grow, the model could open new opportunities for landlords.

• Seasonal choice is masking structural shortage.
  Cotality’s late-2025 analysis shows rental growth re-accelerated as vacancy tightened, confirming that supply remains structurally constrained. The current lift in listings is about timing, not relief, and it will fade.

• Low growth and spending may mean higher rates, longer.
  The AFR covered weaker RBA forecasts for medium-term growth at just 1.6% to 2028. Economists warn persistent government spending and weak productivity could pressure inflation and keep interest rates elevated.

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So what: January noise and a rate hike have changed sentiment, not structure. The shortage is structural; the volatility is cyclical.

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🎯 In Focus: January churn, not weakening demand

January compresses movement:

• Fixed-term leases commonly end around year-end
• Student and share-house turnover peaks
• Listing volumes rise at the same time
• Higher interest rates raise the cost of every vacant week

The result is a brief period where tenants have more choice, even though the underlying supply shortage hasn’t changed. For those who are active in the market, it’s a good time to lock in a stable, long term, tenant.

📦 The Property Punchline

All of Australia after the latest RBA announcement...

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‍Next edition: How will the banks, investors and the market as a whole respond to the prospect of future rate increases?

Cheers,
Jeremy + The RentBetter Team

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