Rental squeeze continues across Australia

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National vacancy rates continued to track below 2% in July, suggesting that the rental squeeze is still continuing. But which major capital saw a shock increase in vacancy?

New data from analysts SQM Research shows that the national vacancy rate remained at just 1.9% in July – the same level as in June and as in the previous July.

Vacancy rates largely remained stable, with most cities seeing minor falls or holding steady. However, Sydney - usually seen as one of Australia's tightest rental markets - actually saw an increase in vacancy of 0.2% to reach 1.6%. This still indicates a tight market, however, so Sydney landlords shouldn't panic just yet.

The tightest rental market in the country is still Canberra, with a vacancy rate of just 0.7% and only 333 vacant properties; Melbourne remained the market with the highest vacancy at 2.8%.

Even so, the general situation is still positive for property investors. SQM Research managing director Louis Christopher argues the national vacancy rate of 1.9%, means the tightness in the Australian rental market is yet to be alleviated.

"A general oversupply of stock for sale and an undersupply of properties for rent," said Christopher. "That is where the market is right now. It perfectly explains why we have falling house prices while rents are rising at a faster rate than inflation."

Vacancy rates, July 2011

Sydney: 1.6%
Melbourne: 2.8%
Brisbane: 2%
Adelaide: 1.6%
Perth: 1.2%
Canberra: 0.7%
Hobart: 1.9%
Darwin: 1.1%
Australia: 1.9%

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