SQM September 2026 Vacancy Rate: 1.4% as Sydney Unit Rents Fall and the Jobs Market Softens

Published 17 October 2026. Data cut-off: SQM vacancy for September 2026 (released 13 October 2026); advertised rents for the 30 days to the week ending 12 October 2026; ABS Labour Force September 2026 (released 15 October). Forecasts and market pricing quoted are as at 16 October 2026.

What Changed in the Vacancy Rate From August to September

Source: SQM Research, National Vacancy Rates, September 2026 (released 13 October 2026) and the August 2026 release; September 2025 rates and counts from SQM's city series. Percentage-point changes are our arithmetic on SQM's published rates. Darwin's and Hobart's stocks are very small and their monthly moves should be read with caution.

The cycle low was 1.0% in March 2026, with 31,732 vacancies. April's rise to 1.2% was the turning point, the rate held at 1.3% from June to August, and September's 1.4% is the first further step; the full series is on the vacancy rate tracker. Over six months the market has added about 10,500 vacant dwellings.

This is the first spring print. SQM expected vacancy to rise into December on the usual seasonal lift in listings, so the rise itself is on script; the information is in the rent series, where unit rents fell in the month that house rents took their seasonal lift.

Sydney: Unit Rents Fall First

What SQM reports. Sydney's vacancy rate has risen 0.5 points in a year and its vacant rentals from 9,617 to 13,331. The rent series split in September: houses +2.3% over the 30 days to 12 October, units −1.0%; annually, house rents are up 5.5% and unit rents 3.5%, the smallest unit-rent gain of any capital except Perth (1.9%).

The split is national, and SQM treats units as the signal because house rents carry the usual spring lift. Nationally, house asking rents rose 1.6% in the month and unit rents fell by the same amount; unit rents fell in seven of the eight capitals. Christopher: “Some of the strength in house rents reflects the usual spring lift, so the more telling signal is in units, where tenants may finally be seeing some relief. Annual rental growth of 7.6% nonetheless remains elevated.”

Source: SQM Research, Advertised Rents, week ending 12 October 2026 (30-day and 12-month changes as published). SQM prints the monthly unit change for five capitals (bold) and reports that unit rents fell in seven of the eight capitals; the release does not identify the exception.

Two cross-reads from the September quarter. Domain's September-quarter rental report has capital-city house rents unchanged over the quarter and unit rents up a modest 1.5%, with Sydney (houses −0.6%, units unchanged) and Canberra the only capitals to record declines in house rents, and Melbourne, Brisbane, Adelaide and Perth flat across both types. Domain's quarterly medians and SQM's 30-day asking rents are different measures over different periods and are not interchangeable. Domain's reading is that “affordability limits may be emerging after several years of strong increases”, and it sets the same test SQM set last month: “If the usual seasonal uplift fails to materialise, it would provide stronger evidence that affordability constraints are limiting further growth in Australia's larger capitals.” Cotality's rent index, in its October chart pack, has national rents up 0.5% over the September quarter, the smallest quarterly rise since December 2024, and 5.5% over the year, with its own vacancy measure at 2.0%, the highest since January 2025.

Set against Cotality's price data.

Source: SQM Research, September 2026; Cotality Home Value Index, September 2026 (index results as at 30 September, released 1 October 2026). Our pairing of the two datasets; neither provider publishes this comparison, and it is descriptive, not a modelled relationship.

Our interpretation. The ordering from last month has held. Sydney and Canberra, the two capitals with the largest annual rise in vacant stock, are two of the three furthest below their price peaks and the two where Domain recorded falling house rents. Melbourne sits where it sat in August: values 7.5% below the 2022 record, vacancy equal-highest with Canberra at 1.9%, but only 8% more vacant stock than a year ago. Brisbane, Perth and Adelaide have fewer vacancies than a year ago and values still up over the year.

What has changed is the unit signal. Cotality's Pain & Gain report for the June quarter found 11.4% of Sydney unit resales and 20.8% of Melbourne unit resales sold at a loss, so the unit market was already the weak segment on the price side before rents turned. The vacancy data does not identify which mechanism dominates, and we do not describe investor selling as the cause.

Three Rent Measures, Three Answers

Source: SQM Research (13 October 2026); Cotality Monthly Housing Chart Pack, October 2026; Domain Rental Report, September 2026 quarter; ABS Consumer Price Index, August 2026 (released 30 September 2026: headline 4.0%, housing 5.7%, rents 3.6%); the lag mechanics are in our July CPI note.

The sequence matters for anyone underwriting a purchase on “rents up 7.6%”. That figure is the past twelve months of a series that is now flat for houses and falling for units; the whole-stock measure is growing at about three-quarters of that pace, and the CPI measure is likely to keep printing above 3% for some time as leases signed in 2025 reset, a lag effect rather than a forecast of new rent rises. The quarterly measures also lag by design: a quarter ending 30 September cannot show a divergence that opened in the four weeks to 12 October.

Jobs: The New Variable for Rental Demand

Source: ABS Labour Force, Australia, September 2026 (released 15 October 2026), seasonally adjusted; SQM Research, September 2026. ACT and NT state rates are published in trend terms only and are omitted. Our pairing; descriptive only.

The ABS's Sean Crick noted that “this September a higher proportion of people remained unemployed compared to recent years”; part-time hours fell 1.5%, underemployment rose to 6.3% and youth unemployment to 11.1%. Those are the groups most likely to be renting.

Why it matters for vacancy, in scenario terms. Rental demand depends on household formation, which is sensitive to job security: when employment weakens, young renters stay longer in share houses or family homes and some households consolidate. In the sub-1% capitals the effect would be slower rent growth rather than rising vacancy. In Sydney and Melbourne, where vacant stock is already 39% and 8% above a year ago, a further softening in jobs would add to vacancy from the demand side while listings add to it from the supply side. The counter-case is that a weaker labour market also delays first-home purchases, which keeps some households renting; the data does not say which effect dominates.

For the cash-rate outlook, the jobs miss weakened the case for a fifth increase on 3 November: as at 16 October, Westpac and ANZ still forecast a rise to 4.85%, CBA, NAB and AMP expect a hold, and secondary reports on 15 October, the day of the jobs release, put market-implied odds of a November rise at roughly 10% to 15% depending on the source and time of day, and the figure moves daily; read it as of that date. The September-quarter CPI on 28 October is the last major input before the meeting.

Supply and Demand: The Fundamentals Versus the Cycle

• Population. Australia had 27.9 million people at 31 March 2026, up 1.4% over the year; net overseas migration eased to 292,100, and Victoria (+1.6%) combines the second-fastest growth with the highest unemployment.
• Approvals. August's 16,953 dwelling approvals (seasonally adjusted, ABS, released 30 September) were 6.1% below July. Private-sector house approvals rose 3.7% to 10,885, 18.4% above a year earlier and the eighth month above 10,000; private dwellings excluding houses fell 21.2%. Approvals lead completions by one to two years or more, so the current fall in unit approvals says nothing about the apartments completing this spring, which reflect 2023–24 approvals. The data cannot separate a completions effect from a demand effect; Melbourne, with the larger pipeline, is where it would show first.
• Listings and yields. Cotality's October chart pack has total listings at 145,573 in the four weeks to 11 October, 19.1% above a year ago and 2.7% above the five-year average, with new listings 7.9% below last year: stock is accumulating because sales were 20.9% below September 2025, while fewer new listings are arriving. Gross rental yields rose to 3.85% nationally, the highest since August 2019, and as in August the expansion is coming from the price side rather than from rents; the mechanics are in Rental Yields Are Rising as House Prices Fall.

Was SQM's December Path Right?

Source: SQM Research releases of 15 September and 13 October 2026. “Reading” is our assessment.

Our scenarios, updated. Last month we set out three scenarios for the October-to-January leasing season. September narrows them.

Our scenario framing on SQM's and Domain's published expectations. Qualitative, not modelled.

One addition to the affordability argument from August: Sydney's median house asking rent of $1,159 a week is about $60,300 a year against wage growth of 3.2% (ABS Wage Price Index, year to June 2026). Houses are still letting at that rent in the spring lift; unit asking rents were marked down 1.0% to $749 a week, which is consistent with landlords meeting the market rather than tenants paying last month's price. The pattern is consistent with the affordability ceiling binding first among the most price-sensitive tenants, and we hold it as a contributing explanation, not the cause.

What It Means for Investors

Illustrative underwriting scenarios, updated for September. These are sensitivity ranges for stress-testing a purchase, not forecasts.

Our illustrative scenarios, October 2026. Ranges are designed to be conservative against SQM's and Domain's current readings. A citywide vacancy rate does not translate directly into a given property's vacancy duration.

In the tight capitals the risk is still paying for growth that is slowing: Brisbane's 8.1% annual house-rent growth came with a flat September, and Perth's unit rents are close to flat on the year. Our units-versus-houses guide argued that units in the large capitals carried more rent risk and more resale risk; the September rent and June-quarter resale data both point that way.

For an investor weighing a sale against a hold in Sydney or Melbourne, the rent side now cuts the other way from the price side: falling values argue for waiting, flat or falling rents on a unit argue against carrying it. The Sell or Hold Planner runs that trade-off per property under the enacted 1 July 2027 rules.

What to Watch

• ABS CPI, 28 October. The rents component covers existing leases and lags; on our reading it is likely to stay above 3%. The number that moves the RBA is the trimmed mean (3.6% in August); a print at or above that keeps the Westpac and ANZ hike call alive.
• Cotality HVI, 2 November. A seventh monthly fall would keep yields rising from the price side. Watch the unit indices in Sydney and Melbourne against the rent series above.
• RBA, 3 November. A fifth rise to 4.85% would lift holding costs at the moment unit rents are falling in the large capitals; a hold would remove that headwind without changing the rental picture.
• SQM October vacancy, mid-November. The test SQM set: does the unit softening continue? National at or above 1.4% and Sydney at 1.9% would put the December path on schedule; Brisbane and Perth rents firming would confirm the two-speed base case. A Sydney unit-rent rebound of 1% or more in October would mark September as a blip rather than a turn.
• Labour Force, 19 November. A further rise in unemployment, or in Victoria's rate, would strengthen the demand-side case for easing in Melbourne.

Methodology and Limitations

SQM's vacancy rate counts online rental listings advertised for three weeks or more against the total number of established rental properties, a listings-based measure with data from 2005. Advertised rents are asking prices on new listings over a rolling 30 days to the week ending 12 October 2026 and lead rents actually paid. Darwin (162 vacancies) and Hobart (127) have very small stocks and volatile monthly moves. Figures are subject to minor revision. September is the first full month after the SMSF residential borrowing ban commenced on 10 August 2026; the data cannot isolate any effect and none is claimed. The pairings with Cotality price data and ABS state unemployment are ours and descriptive; the scenarios are qualitative framings of SQM's and Domain's published expectations. Bank forecasts and market pricing will age. ABS approvals and labour-force figures are seasonally adjusted.

The Bottom Line

The September 2026 SQM release shows the national vacancy rate at 1.4% for the first time this cycle, Sydney and Melbourne supplying the increase, and the rent series splitting between houses that rose on the spring lift and units that fell in seven of eight capitals. The national rate reached the bottom of SQM's December range three months ahead of the date; Sydney is a tenth of a point short. Two days later the ABS reported unemployment up 0.1 points to 4.7%, with Victoria the weakest mainland state.

For investors, the income case in Brisbane, Perth and Adelaide held at a tight base but with a flat month, so underwrite it at slower growth. The cash-flow case for a unit in Sydney, Melbourne or Canberra weakened at the same time as prices fell, and a softer labour market in New South Wales and Victoria is a new reason not to assume the spring season rescues it. Houses in the large capitals still have a seasonal tailwind; whether it lasts past January is the question the next two prints will answer.