The national residential rental vacancy rate recorded a drop in June, with all capital cities recording declines in vacancy rates over the month.
Research house SQM says vacancy rates dropped from 2.5 per cent in May to 2.2 per cent over the month, with the end of financial year recording a total number of empty residential properties across Australia at 77,132.
SQM managing director Louis Christopher said this time last year the national vacancy rate was slightly higher, at 2.3 per cent.
“We believe the surprise fall in vacancy rates is due to Airbnb property owners giving up on the longer-term leasing market and moving back to short-term leasing, especially in light of the July school holiday period and the opening of some state borders.
“The fall in rents over the same period for a number of our capital cities suggests that the weakness in the rental market remains,” Christopher said.
The coronavirus pandemic and its impact on employment, along with economic uncertainty and a halt on migration are factors playing into concern surrounding the property market and increasing vacancy rates across Australia.
Capital city vacancy rates
|City||June 2020 Vacancies||June 2020 Vacancy Rate|
^ Source: SQM Research
Sydney currently has the highest vacancy rate in Australia at 3.8 per cent, recording a drop of 0.2 per cent over the month.
Melbourne follows Sydney with a vacancy rate of 3 per cent, and posted a slight 0.1 per cent decline.
Hobart’s vacancy rate is the lowest across Australia at a tight 0.9 per cent, declining by 0.4 per cent over the month.
“Going forward, our expectation is the Australian rental market will remain weak for the duration of 2020 or until such time as the international border reopens and we as a community have passed the worst of Covid-19,” Christopher said.
Recent data released from the Australian Prudential Regulation Authority (APRA) shows that loans to investors make up 34 per cent of home loan repayments that have been deferred.
APRA says the lift in investor deferrals could spark a wave of distressed sellers to the market.
According to APRA figures, interest-only loans made up 14 per cent of repayment holidays, while mortgage holders with a loan-to-value ratio of more than 90 per cent made up 8 per cent of loan deferrals.
Domain’s latest rental report shows unit rentals experienced the biggest price drop in more than 15 years, with a rent price fall of 3.2 per cent over the June quarter.
Rental prices fell across most major capitals for the period, according to Domain.
Over the month, SQM says capital city asking rents dropped 3.1 per cent for houses and 4.5 per cent for units to asking rents of $534 a week for houses and $421 a week for units.
Sydney, Melbourne and Adelaide recorded declines in asking rents for both houses and units over the month to 12 July, while Brisbane and Perth continue to record increases in house and unit asking rents.