By Poppy Johnston in Canberra

Even though rents are growing more slowly, Treasurer Jim Chalmers says they are still too high and there are not enough properties available for tenants.

Rents remain stubbornly high as evident in the Australian Bureau of Statistics June quarter inflation print, rising 7.3 per cent annually, though down from 7.8 per cent in the March quarter.

This strength reflected still-low vacancy rates and a tight rental market, the statistics bureau said.

Dr Chalmers said the state of the housing market was a “defining issue” for the economy.

The housing pipeline is “not what we want it to be”, he said, with building approval numbers hovering around a 12-year low and contributing to the shortage of rentals.

About $32 billion in new federal investment was going towards building new homes, Dr Chalmers told ABC radio on Thursday.

“Rents are too high even with the help being provided by our two increases to Commonwealth rent assistance,” he said.

Asking rents – as opposed to actual rents paid as measured by the ABS – were also still moving higher, according to real estate data firm CoreLogic.

But its rental index released on Thursday showed only 0.1 per cent growth in July, which was the smallest monthly rise in nearly four years – boding well for renters as well as future inflation prints.

CoreLogic research director Tim Lawless said units were driving the slowdown and aligned with the peak in net overseas migration in the first quarter of 2023.

“Housing demand from overseas migration tends to favour inner city unit rental markets,” Mr Lawless said.

The residential real estate market was also showing signs of slowing in July.

Despite national home prices posting their 18th consecutive gain in July, up 0.5 per cent, three capital cities were down for the month and the pace of growth had slowed.

Mid-sized capital cities continued to grow strongly, with dwelling values rising 1.1 per cent in Brisbane, two per cent in Perth and 1.8 per cent in Adelaide.

Conditions for prospective buyers were better in Melbourne, Hobart and Darwin, with prices down in all three cities across the month.

Jarden economist Anthony Malouf said a firmer outlook for interest rates following the June quarter inflation data would support the housing market for the rest of the year.

“Following the June quarter CPI print, which was broadly in line with expectations, the fear around a potential rate hike has faded and has likely firmed beliefs that rates are now at their peak, likely giving both buyers and sellers greater,” Mr Malouf said.

Looking into 2025, he said the timing of cuts and expectations for easing would be key.