Vacancy rate figures may point to oversupply fears being overblown

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Australia’s residential vacancy rate remained steady over March according to figures released this week.

Rental market analysis from SQM Research has revealed the national vacancy rate was 2.3% during March, the same result as was recorded in February.

While there was no month-on-month movement, the national rate is higher year-on-year, with it being recorded at 2.1% during March 2015.

During March, Perth recorded the highest vacancy rate of any market in the country at 4.1%, up 0.2% compared to February.

Darwin’s vacancy rate was the next highest at 3.6%, though no movement was recorded during March, while 0.1% increase pushed Brisbane’s vacancy rate to 2.6%.

On the other end of the spectrum, Hobart had the lowest rate during the month at0.9%, while 0.2% decrease bought Canberra down to 1.1% and Sydney remained at 1.6%.

Vacancies in Melbourne pulled back 0.1%, putting the Victorian capital on even footing with Adelaide at 1.9%.

In year-on-year terms, Perth was home to the largest annual increase at 1.4% over the 12 months to March, followed by Brisbane at 0.5%.

Hobart and Canberra have seen the biggest falls over that period, with vacancies down 0.5% and 0.4% respectively.

Source: SQM Research

Louis Christopher, head of SQM Research said the figures for March illustrate that some property markets in Australia may be suffering from oversupply, while others may have been unfairly painted with that brush.

“Overall national vacancy rates remain steady however there is contrast in the market place and some current misperceptions over areas of oversupply. Right now the data suggests the areas of oversupply are confined to Perth, Darwin and the Brisbane CBD. Other bodies have suggested Melbourne should be classified as oversupplied,” Christopher said.

“On this point, our data suggests otherwise. Vacancies rates for Melbourne have actually been in a downtrend now since 2014 and are now below 2%. Even in localities well known for elevated vacancies, such as the CBD, Docklands and Southbank, our number suggests vacancies have actually been falling in these specific localities. They have now fallen to levels below their long term average and certainly below levels that we were publicly concerned about, but no longer are as concerned,” he said.

SQM claims Melbourne’s CBD vacancy rate is now 1.9% compared to 6.1% during March 2014, while Southbank’s vacancy rate was 5.6% two years ago compared to its current 3.7%.

Similarly, Dockland’s vacancy rate has improved from 5.8% to 2.9% in the past 24 months.

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