Australia is experiencing a worsening rental crisis, the record low vacancy rates, surging rents, and growing housing insecurity are the key factors in this crisis. At the core of the crisis is a severe mismatch in the equilibrium between supply and demand. As of mid 2023, the national rental vacancy rate had dropped to just 1%, below the 3% level typically considered a healthy rate (ABC News, 2023). This scarcity has driven up prices, with median rents increasing by more than 20% (ABC News, 2023) in some cities over the past year.

A Deeper Look

The causes of the crisis are complex. One major factor is the long-term underinvestment in affordable and public housing. Since the 1990s, successive governments have withdrawn from large-scale public housing development, leaving the private market to dominate rental supply (ABC News, 2023).

The Solution?

Government intervention has so far focused partly on limiting demand, such as by proposing caps on international numbers. This move aims to reduce pressure on housing in key urban centers. However, international students represent only 31 % (AIHW 2025) of Australia's rental population, suggesting that such a measure would have moderate impact on the border crisis.

Moreover, restricting international students threatens Australia’s university sector, which depends heavily on overseas enrolments for funding and economic contributions. I argue that these interventions are a distraction from more effective, a more long-term solution which should be towards increasing housing supply. Experts call for greater government in social and affordable housing, tax reforms to discourage speculative investments, and incentives to build purpose rental accommodation (ABC News, 2023).

Conclusion

In conclusion, Australia’s rental housing crisis is the result of structural issues that demand structural solutions. Policies targeting demand, like capping student numbers, risk harming other sectors and overall GDP without addressing the underlying shortage of housing.