Residential vacancy rates are rising in a number of key mining towns, with investors being urged to be on guard for any negative shift in the broader economy and resources sector.
Figures released this week by SQM Research suggest towns such as Karratha (March vacancy rate of 3.7 per cent), Port Hedland (4.6 per cent) and Gladstone (5.6 per cent) are seeing less demand for rental property.
“We are now watching the data very closely on the various mining towns in the country,” said managing director of SQM Research, Louis Christopher.
“Property investors over the past 10 years have done extraordinarily well if they held real estate in mining towns. However, there is always a risk that when a down turn arrives, these markets could have a very rapid and severe correction.
“We remind investors to remain very cautious when it comes to these towns.”
For other capital cities, SQM reported that vacancies generally remained steady or modestly declined for the month of March. The net result at a national level during the month was 52,931 vacancies, which represented a vacancy rate of 1.9 per cent, similar to the preceding month.
Of the capitals, Adelaide reported a vacancy rate of 1.3 per cent in March, which was the same as the previous month; Perth was at 1.0 per cent, up 0.1 per cent; Melbourne came in at 2.6 per cent, down 0.1 per cent; Brisbane recorded a 1.7 per cent vacancy rate, down 0.1 per cent; Canberra’s rate hit 1.4 per cent, up 0.2 per cent; Darwin’s fell 0.1 per cent to 1.2 per cent, while Hobart reported a 0.1 per cent drop to 2.0 per cent.
SQM said Canberra’s rise in rental vacancies has also been noticeable since July 2012 and may be associated with a well-known increase in apartment developments, together with federal government attempts to reduce the budget deficit.
At this stage, SQM said it is too early to make a valid assumption as to why vacancies may be beginning to loosen in Perth, however it should be noted SQM Research regards the vacancy rate in this capital city as still in favour of landlords.
Contrastingly, Melbourne has revealed a gradual decline in vacancies over the past months, falling from above three per cent in December 2012 down to 2.6 per cent in March 2013. This is seen as a positive for this capital city, which has been recording elevated levels in vacancies for quite some time now.
SQM said its calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties.