The February vacancy rates results are in and they remain at the lowest point on record, primarily due to the return of foreign students.

Conditions remain challenging for many tenants across the country, as vacancy rates linger at 0.8%, with combined capital cities reporting a further drop in vacancy levels to 0.7%.

The three biggest markets of Sydney, Melbourne, and Brisbane, all posted tighter vacancy rates over the month. Darwin also registered a decline in vacancy rates while the rest, except for Hobart, maintained their low vacancy levels.

Hobart reported a slight increase in vacancy rates, but it remained low at 0.6%.

Feb-23 Jan-23 Feb-22 Monthly change Annual change
National 0.8% 0.8% 1.1%
Combined Capitals 0.7% 0.9% 1.4%
Combined Regionals 0.8% 0.8% 0.6%
Sydney 0.9% 1.0% 1.6%
Melbourne 0.8% 1.0% 2.3%
Brisbane 0.6% 0.8% 0.8%
Perth 0.3% 0.3% 0.5%
Adelaide 0.3% 0.3% 0.3%
Hobart 0.6% 0.5% 0.2%
Canberra 1.5% 1.5% 0.5%
Darwin 1.2% 1.3% 0.7%
Source: Domain

One of the major reasons behind the seemingly dwindling supply across all capital cities is actually an increase in demand on the back of the return of international and domestic travel.

The recovery of temporary visa holder numbers and the return of foreign students were the major drivers of the rental demand.

“The shift in demand was highlighted recently after the announcement from China’s Ministry of Education to stop acknowledging degrees gained online in January,” the report said.

The announcement prompted an increase in searches from China for rentals in Australia. These searches went up significantly over the past two months: 175% annually in January and 125% annually in February.

“This suggests the pressure on the rental market could continue, particularly for cities that traditionally see a higher intake of residents from overseas,” the report said.

On an annual basis, the volume of vacant rentals across the country is down 33.1%, driven mostly by the 46.3% drop seen in capital cities.

Interestingly, the volume of rentals in across combined regionals went up 36.7% from last year.

Feb-23 Monthly change Annual change
National 18,970 -9.4% -33.1%
Sydney 5,458 -11.0% -42.9%
Melbourne 3,820 -20.9% -63.8%
Brisbane 1,611 -14.5% -21.6%
Perth 611 -3.0% -33.2%
Adelaide 338 -6.6% -4.0%
Hobart 146 18.7% 147.5%
Canberra 602 3.6% 171.2%
Darwin 205 -6.0% 66.7%
Combined Capitals 12,791 -13.4% -46.3%
Combined Regionals 6,179 0.0% 36.7%
Source: Domain
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