In February 2025, the Australian city of Melbourne had a residential rental property vacancy rate of around *** percent. The February residential rental property vacancy rate in Melbourne reached a high of *** percent in 2021.

In March 2025, the Australian cities of Melbourne and Canberra had rental property vacancy rates of 1.5 percent, respectively. In contrast, the rental property vacancy rate in Hobart was estimated at 0.5 percent in the same month.

In the first quarter of 2025, the office property vacancy rate in the central business district of Melbourne, Australia, was the highest, with a rate of around **** percent. The central business district of Sydney had an office vacancy rate of **** percent in comparison.

In the second half of 2024, the industrial property vacancy rate in Melbourne was the highest across Australia, with a rate of around *** percent. The lowest vacancy rate of industrial properties was in Perth, where a rate of *** percent was recorded.

In the first quarter of 2021, the vacancy rate of prime office real estate in Melbourne CBD was *** percent. The vacancy rate had been decreasing until the end of 2019. However, the recent COVID-19 outbreak seemed to have led to a decline in office leasing enquiries, and therefore an increase in the vacancy rate in 2020 and 2021.

The value of commercial building activity in Australia was forecasted to amount to around **** billion Australian dollars in the 2025 fiscal year. This was around the same as the commercial building activity value as of fiscal year 2019, which reached over **** billion Australian dollars.

Commercial building activity boom

The short-term increase in commercial building activity was attributable to strong employment and population growth. Buildings such as shops, hospitals, cafes, restaurants, schools, and offices have been required to fill the needs of the increasing Australian population. In addition, warehouses, factories, and wholesale distribution facilities have been required to further support this growth. In the tourism sector, there has been a need for more accommodation options in the major tourist destinations in the country.

Office space demand

In the office segment, the nation’s larger cities such as Melbourne and Sydney have remained competitive with some of the lowest vacancy rates in the world. In Sydney, the recent COVID-19 outbreak seemed to have led to a decline in office leasing enquiries, and therefore an increase in the vacancy rate in 2020. The same trend was seen in the prime office vacancy rate in Melbourne. It is yet to be seen if the office space demand will return to pre-pandemic levels in the near future.

Over the past decade, cowork spaces have developed into a small, but important, feature of Australia's commercial office property mix. The Australian market is slowly catching up to surging numbers of cowork spaces around the world, although its development is mostly concentrated in Melbourne and Sydney. A flood of new entrants have set up coworking sites in major cities and annual revenue has grown over time as a result. Coworking sites are pegged as an alternative to traditional commercial office leasing, offering shared workspaces to a variety of downstream clients, including freelancers, start-ups and small businesses. Instead of long-term commercial leases, customers tend to buy memberships or rent out offices on a temporary basis. This has become increasingly popular among certain sections of Australia's economy, driving growth in enterprise, establishment and employment numbers over the past decade. As larger sites have opened up with greater scope to drive additional revenue streams and charge higher prices, the industry’s profitability has also expanded over time. The pandemic upset an otherwise consistent growth narrative, as prolonged citywide lockdowns in Melbourne and Sydney drastically constrained downstream demand. With this rough period, annual revenue is expected to marginally drop at an annualised 0.1% to $537.2 million over the five years through 2024-25. However, this trend includes an anticipated rise of 8.3% in 2024-25 as occupancy rates are trending back towards pre-pandemic averages and new coworking sites are expected to open up. The ratio of office stock accounted for by coworking spaces is rising again after falling during the pandemic. Revenue is forecast to climb at an annualised 5.3% to $693.9 million through the end of 2029-30. New providers will continue to enter the industry, particularly in areas of the country where the market is less developed. In more mature markets, larger operators are forecast to account for a rising share of industry revenue, opening up bigger and more profitable sites that lift the average revenue per establishment.

As of December 2024, the Australian city or region with the highest hotel occupancy rate was Perth, with an occupancy rate of ** percent. Darwin had the lowest hotel occupancy rate at ** percent of hotel rooms occupied.

According to a survey of hotel operators in Melbourne, Australia in April 2020, the actual hotel room occupancy rate was forecast to be only ** percent for Q3 2020. After social distancing measures were put in place in March 2020, travel industry performance and hotel occupancy performance decreased significantly.

As of May 2021, hotel occupancy rates in Melbourne, Australia were at around ** percent of the levels seen in May 2019. A pronounced decline in the amount of international travelers due to the COVID-19 pandemic has slowed the recovery in the hotel industry.

The average housing costs for Australian renters of private property amounted to 415 Australian dollars per week in 2020. In 2022, between 21 to 29 percent of the household income of renters was spent on rent across the country.

Short-term impact of the coronavirus pandemic

With the global outbreak of COVID-19, the historically strong Australian housing market is not immune. In the short-term, the country saw a drop in rental housing demand as a direct result of migration ceasing, falling overseas student numbers, and younger people opting to stay home. With travel opening up, a spike in rental vacancy rates is expected, with short-term rentals, such as those from travel websites, suddenly flooding the long-term rental market. The influx of housing may ease pressure on potential tenants in certain areas, and it may have the carry-on effect of rental costs stabilizing, or in some cases declining. In the inner suburbs of Sydney and Melbourne, for instance, there has already been a significant increase in rental listings compared to the previous year.

As of April 2022, one bedroom Airbnbs in Perth and Darwin accounted for the highest occupancy rates across Airbnbs in Australia, at ** percent occupancy. Melbourne had the lowest airbnb occupancy rate at ** percent.

In the second quarter of 2023, around ** percent of office properties in Sydney, Australia had occupancy rates greater than ** percent compared to over ** percent of office properties in the same quarter of 2019. Office properties with occupancy rates higher than ** percent also declined significantly in Melbourne in 2023 from 2019 figures.