After a tough few years of steep rent hikes and stiff competition to secure a property, renters are seeing glimmers of light at the end of the tunnel.
The days of fast-growing asking rents are fading and prices may even fall in some cities in 2025, in the view of Market Economics managing director Stephen Koukoulas.
The return to more normal migration patterns after the pandemic disruption combined with improving listings and housing supply should keep a lid on market rents, the economist said.
"That sort of dynamic says to me that the rental market will ease throughout the year, which is good news for renters," he told AAP.
CoreLogic's gauge of market rents suggest conditions have been broadly flat in the second half of 2024, with small falls recorded in cities such as Melbourne and Sydney.
In December, the real estate data analysis firm recorded a mild 0.1 per cent lift in rents, to be 4.8 per cent higher over the calendar year.
National rents are now growing at their slowest annual rate since March 2021 - a period characterised by weakness in the rental market in the early stages of the pandemic.
While no longer rising rapidly, the 4.8 per cent annual increase in rents clocked in 2024 was still double the two per cent pre-pandemic average.
Advertised price easing for new rentals has been leading the broader market, which typically happens with a lag as rents are re-evaluated with lease updates.
CoreLogic head of research Tim Lawless expected market rents to hold flat throughout 2025, or potentially fall a little.
Normalising migration patterns was part of the story as well as affordability constraints, with households reaching the limit of what they could afford to pay.
He said rental affordability was the worst it had ever been, with the typical household spending about a third of their gross income on rent.
This was fuelling a return to more occupants per property, somewhat reversing a COVID-driven preference for extra rooms and space to work from home.
While capital city average household size remains below pre-pandemic levels, the latest analysis from the Reserve Bank of Australia has the measure trending higher.
Mr Lawless expects that pattern to continue.
"People that were utilising, say, a second or third bedroom for the home office are now probably more inclined to tenant that spare room, just to help them cover cost-of-living pressures," he told AAP.
Rental vacancy rates have also been drifting higher, reaching a three-year high of 1.4 per cent in November.
SQM Research managing director Louis Christopher says university students finishing their courses tend to push up vacancy rates at that time of year but broader market dynamics were also playing a role.
At two per cent, Melbourne's vacancy rate is now almost back in equilibrium, he said, with Sydney's sitting at 1.8 per cent.
"While we still have rental shortages in our two largest capital cities, the situation has clearly improved from the very difficult days of 2021 to 2023," Mr Christopher wrote in a report.
