Where do Melbourne’s vacancy rates stand in Q1 2026?

Melbourne’s rental vacancy rate eased slightly to 2.5% at the end of Q1 2026, bringing it back in line with levels from around 12 months ago. The market remains tightly held despite that marginal movement.

Inner and middle ring vacancy rates held largely steady at 2.6% and 2.8% respectively. While both represent marginal upward movement, neither signals any meaningful easing in rental conditions, with both remaining well below medium and long term averages.

What is happening in the outer ring rental market?

After an unexpected spike in the latter half of 2025, which saw vacancy rates peak at 2.5%, the outer ring has tightened sharply back to 1.8% as of Q1 2026, returning to early 2025 levels. That is a significant move in a short period and points to sustained underlying demand in Melbourne’s growth corridors.

Will the investor tax loosen the rental market? 

Melbourne’s rental market is expected to remain tight despite the likely investor pivot toward new builds driven by the tax changes. Near term impacts on weekly rents are expected to be mild.

Over the medium to long term, some disruption is possible as investors move away from older residential stock. However, the dynamic is more nuanced than a simple reduction in rental supply. Established dwellings vacated by departing investors are likely to be absorbed by owner occupiers, evening out the overall supply impact.

The pressure will shift. Rather than bearing down on prospective buyers competing with investors for established stock, it will move toward renters who lose access to that supply as it transitions to owner occupation.

Want the full picture?

This article draws on findings from RPM Group’s VIC Metro Market Intelligence Report – Q1 2026. Access the complete data and market forecasts in the full report.