Population Still Steering Clear of Cities, For Now
Central business districts have taken another blow, with residential vacancy on the rise and rent falling by 3.1 per cent for houses and down 5.5 per cent for units during September.
Melbourne is at a new all-time high of 10.8 per cent, the Brisbane CBD vacancy rate also increased to 12.5 per cent, however Sydney is slowly dropping, from 12.9 per cent in August to 12.8 per cent in September, according to SQM Research.
This is the polar opposite of the extremely tight markets seen in Australia’s other capitals and regions, which sit below one per cent.
On a national scale, residential rental property vacancy is at a mere 2 per cent, with 70,389 vacant properties, down from 2.1 per cent in September 2019.
Rent has also moved up by 4.8 per cent for houses and 1.7 per cent for units on average during the past year.
Residential vacancy rates
| City | Sept 2020 vacancy rate | Sept 2019 vacancy rate | Rent Sept 2020 - houses, units | 12 month change - houses, units |
|---|---|---|---|---|
| Sydney | 3.5% | 3.2% | $611.7, $452.1 | -8.9%, -8.9% |
| Melbourne | 3.8% | 2.0% | $515.3, $390.2 | -2.2%, -5.1% |
| Brisbane | 2.0% | 2.3% | $467.4, $377.1 | 1.1%, -0.6% |
| Perth | 0.9% | 2.7% | $473.1, $362.3 | 6.8%, 7.6% |
| Adelaide | 0.8% | 0.9% | $416.9, $315.3 | 5.1%, 1.9% |
| Canberra | 0.9% | 1.0% | $623.9, $479.8 | 1.4%, 3.8% |
| Darwin | 2.9% | 0.7% | $526.6, $369.0 | 1.5%, -3.3% |
| Hobart | 0.6% | 0.6% | $454.5, $382.6 | 4.4%, -5.2% |
| Capital | 2.1% | 1.8% | $463.0, $369.0 | 4.8%, 1.7% |
| Average | 2.0% | 2.1% | $527.0, $411.0 | -3.1%, -5.5% |
^ Source: SQM Research
SQM Research managing director Louis said the population is still looking to stay away from the large cities.
“We think this trend may soon reverse, but to what extent remains a mystery,” Christopher said.
“Elevated rental vacancy rates in Sydney and Melbourne continue to push city rents downwards—this is particularly the case in the CBD and inner-ring suburbs close to the CBDs.
“However, outside Sydney and Melbourne vacancy rates are falling again.
“And then when we consider regional locations, vacancy rates have fallen below 1 per cent which really represents the point of little to no rental vacancy.”
SQM research for September also shows residential listings are down a further 1.2 per cent on the month and down 7.4 per cent on the year.
Despite initial predictions of huge falls in house prices early on in the pandemic, the residential market has been buffered by government stimulus packages, with the market starting to ease and even turn around in some cities.
However, the Reserve Bank expects rental growth to remain subdued through 2021 as restrictions on international migration affect vacancy rates.
Migration will have the biggest impact on metropolitan markets while regional and satellite markets experience a increase in transactions and rental growth.
