Rental shortage drives vacancy rates lower

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Insufficient rental properties dragged the national residential vacancy rate lower in October. The decline was led by falling vacancies in many smaller cities, as well as in Melbourne.

SQM Research reported that the national residential vacancy rate dropped to 2% over the period, marking its lowest level since March 2014. This translated to a total of 67,350 vacant properties across the nation.

The declines recorded in each city might be small, but collectively, they significantly contributed to the overall rate decrease. Hobart’s vacancy rate dipped to 0.3%. Melbourne’s vacancy rate declined from 1.7% in September to 1.6% in October, with 9,320 dwellings available for rent. Sydney’s vacancy rate was unmoved at 2.8% from September, with 19,454 properties available for rent.

Further, Brisbane’s vacancy rate was down to 2.7% from 2.9% in September. Year-over-year, the capital of Queensland saw a 3.4% drop. Perth’s vacancy rate, meanwhile, fell to 3.3% from 3.6% and 4.4% last month and last year, respectively. Canberra’s vacancy rate was unchanged from September’s 0.6%, and Adelaide's remained at a low level of 1.1%. Darwin’s vacancy rate, on the other hand, bucked the trend after rising to 3.8% from 3.6% in September.

Louis Christopher, managing director of SQM Research, explained why the markets are heading downwards.

“In Hobart, there is a severe shortage of rental accommodation with just 78 properties available to rent, and rents are rising quickly, with no slowdown in sight,” he said. “In Canberra too, where many renters live, there are just 387 rental properties available, putting upward pressure on rents. Melbourne’s vacancy rate has remained at low levels over the year. In contrast, we are seeing a surplus of rental properties in Sydney and rental costs are falling, a trend we expect to continue into 2019.”

Capital city asking rents for houses increased 0.2% over the month to 12 November 2018 to $553 a week. Similarly, asking rents for units were higher by 0.2% to $438 a week. Over the year, asking rents for houses rose 0.9%, while unit asking rents dipped 0.2%.

Notably, the asking rent for a three-bedroom house in Sydney is still the highest nationwide at $712 a week and $512 a week for two-bedroom units, although these are expected to change soon.  Asking unit rents in New South Wales’ capital sank 0.4% over the month, while asking house rents fell 0.2%.

In Melbourne, asking rents for houses increased 0.4% over the month to $526 a week, while asking rents for units dropped 0.1% to $406.

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