Worst May Be Over for City Landlords: SQM

Lower residential vacancy rates in most cities and a surge in rents recorded in Perth, Adelaide, and Brisbane could mean the worst is over for CBD landlords.

The data from SQM Research shows Melbourne’s vacancy rate reduced to 4.4 per cent in March from 4.5 per cent in February.

Elsewhere, the vacancy rate was below 1 per cent in Perth, Adelaide, Canberra, Darwin and Hobart, while Brisbane’s rate remained at 1.5 per cent in March.

SQM Research managing director Louis Christopher said, aside from Melbourne and Sydney, vacancy rates remained tight in Australia’s cities, creating a surge in rents in Perth, Adelaide and Brisbane.

“Vacancy rates for Melbourne and Sydney remain elevated,” he said.

“The loss of international student tenants due to Covid-19 has hit both cities hard and the ongoing high rate of dwelling completions is keeping these rental markets in surplus.

“That said, we are seeing increasing signs that the absolute worse for CBD landlords has passed.”

The Melbourne CBD vacancy rate was 8.3 per cent in March and Sydney's 6.2 per cent.

“While they are still elevated, those figures are down from the double digits of last year and fell again in March,” Christopher said.

Meanwhile, vacancy rates rose in the Blue Mountains, NSW's North Coast and Mornington Peninsula.

Christopher said this may be a sign of people beginning to return to the inner cities.

Capital city rents rose 1.3 per cent for houses to $557 per week during the month to April 12, but fell 0.2 per cent for units to $411.

During the year, rents have shown strong growth in the smaller cities, increasing in Darwin by 25.5 per cent for houses and 11.1 per cent for units, and in Perth by 13.2 per cent for houses and 10.9 per cent for units.

SQM figures show the national residential rental vacancy rate rose to 2.1 per cent during March, from 2 per cent in February.

The research house said the rise was driven by increases in vacancies in Sydney as well as a reversal in some of the tight rental markets of regional Australia.

The total number of vacancies Australia-wide sits at 72,436 residential properties.