Residential Vacancy Rates Drop as Population Growth Fuels Demand

The national residential vacancy rate for October has recorded a drop from September and overall a decline of 6,587 properties from a year ago as strong population growth in Australia’s biggest cities drives demand for residential rental accommodation.

Data from SQM Research shows that across Australia in October there were 67,781 properties without tenants compared to 74,368 in October 2016.

Hobart’s vacancy rate is now the lowest on record since SQM started recording data in 2005 – a rate of just 0.3 per cent. In Adelaide, the vacancy rate dropped to 1.4 per cent from 1.6 per cent in September and down from 2.0 per cent a year earlier. In Canberra, the vacancy rate dropped to 0.8 per cent from 1.0 per cent in September.

In the bigger cities, vacancies fell in Sydney to 12,435 in October, down from 13,114 in September, giving a vacancy rate of 1.9 per cent, down from 2.1 per cent the previous month. In Melbourne, the vacancy rate fell to 1.8 per cent with 9,390 rental properties available.

The vacancy dropped in Perth to 4.1 per cent from 4.5 per cent in October, but is still the highest of any capital city. Darwin’s vacancy rate fell from 2.7 per cent to 2.5 per cent over the month.

Source: SQM ResearchManaging director of SQM Research, Louis Christopher, said the vacancy numbers highlighted tighter rental markets in many capital cities.

“We’ve seen big falls in Perth and Adelaide and even Brisbane appears to be recording a slight trend downwards right now,” Christopher said.

“However, we expect vacancies to rise in November and December due to seasonality such as students finishing up their semester and heading home, which may take some pressure off rents.

“In Hobart, the shortage of rental accommodation is the most severe, with just 75 properties available for rent in October, prompting a record low vacancy rate of 0.3% and higher asking rents, especially for units which were up 7.9% over the month to 12 November.”

The research highlights that stock build ups are being absorbed by the additional population, and apart from Brisbane’s CBD, SQM is not seeing a major oversupply of stock.
Asking Rents
Capital city asking rents over the month to 12 November fell 0.4 per cent to $548 a week for houses. Unit asking rents rose 0.2 per cent to $439 a week. Asking house rents jumped the most in Canberra by 2.6 per cent over the month while asking rents for units jumped the most in Hobart by 7.9 per cent.

In contrast, asking rents for houses moderated slightly in Sydney to be down 1.1 per cent over the month. The asking rent for a three-bedroom house in Sydney remains the highest in the nation at $731 a week while for units it stands at $523. Canberra follows at $595 a week for houses and $429 for units.

Asking rents for houses rose in Melbourne, up 0.2 per cent over the month to $510 while unit asking rents fell 0.5 per cent over the month to $393 a week.