Overseas Arrivals Add to Rental Pressures

Australia’s great rental squeeze is not over yet.

While new data shows the national residential property rental vacancy rate has plateaued—albeit at a tight 1 per cent—the pressure is on in the country’s biggest cities.

The rise in international arrivals needing inner-city digs has pushed vacancy rates below average levels in the Melbourne, Sydney and Brisbane CBDs.

According to the latest report from SQM Research, Melbourne CBD fell to 2 per cent, Sydney CBD to 3.4 per cent and Brisbane CBD to 2.2 per cent.

Overall, the total number of rental vacancies nationwide tightened a pinch in July to 36,741 residential properties, compressing from 37,049 in June.

Sydney and Melbourne vacancy rates dropped to 1.5 per cent and 1.6 per cent from 1.6 per cent and 1.7 per cent, respectively.

The falls in the two largest capital cities were offset by rises elsewhere.

Brisbane’s rental vacancy nudged higher from 0.6 per cent to 0.7 per cent. Canberra rose from 0.8 per cent to 0.9 per cent and Darwin edged up from 0.5 per cent to 0.6 per cent.

Regional vacancies in areas including the NSW Central Coast and Wollongong, Queensland’s Gold and Sunshine coasts and many ACT outer areas also recorded jumps in rental vacancies.

“We appear to be recording more evidence of a small easing in rental conditions,” SQM Research managing director Louis Christopher said.

Vacancy rates: July 2022

_{Source: SQM}

“If it wasn’t for the falls in rental vacancies in Sydney and Melbourne, the national rental vacancy rate would have recorded a rise for the month of July as there were vacancy increases in most other capital cities and in many regional locations.

“That said, the rental market by and large remains very tight. 

“And now, with the falls in CBD rental vacancies rates to well below average, we have evidence that the rise in overseas arrivals is starting to put some additional demand pressure in certain pockets.”

Meanwhile, rents continue to sharply rise in most locations.

Over the 30 days to August 12, capital city asking rents increased by another 1.2 per cent taking the 12-month rise to 17.4 per cent.

Capital city house rents have notched up 12-month increases of 15.1 per cent, while unit rents have risen by 16.2 per cent.

However, tenants in Hobart, Darwin and Canberra have been given some marginal relief with falls in weekly rents of 1.8 per cent, 0.6 per cent and 0.3 per cent, respectively.

The national median weekly asking rent stands at $496 a week.