Property managers have been advised to be more realistic in their pricing after vacancy rates reached their highest level in a decade.
The Real Estate Institute of Australia has reported that the average vacancy rate across Australia’s eight capital cities was 2.8 per cent during the last quarter of 2014.
This was compared to 2.7 per cent in the December quarter of 2013.
Darwin had the greatest increase in vacancy rate from the previous year, up 1.9 percentage points to 5.4 per cent.
Perth was not far behind with a rise of 0.9 percentage points to 4.2 per cent.
Melbourne’s vacancy rate also saw an increase of 0.4 percentage points to 3.2 per cent.
With the lowest recorded vacancy rate, Sydney saw a decrease of 0.1 percentage points from the previous year down to 1.7 per cent.
Brisbane and Adelaide also saw a drop of 0.3 percentage points, down to 2.9 per cent and 2.8 per cent respectively.
Hobart’s vacancy rate declined 0.6 percentage points to 3.2 per cent.
Canberra had the highest decrease in vacancy rate, dropping 1.1 percentage points to 4.1 per cent.
Laura Levisohn, head of property management at M Residential, said agents need to adjust to the high vacancy rates by being more realistic in the pricing of their property.
“Our process, which has been the same through an active market versus the current market, is we commence communication with our tenants 60 days prior to their lease expiring to commence negotiations for renewing the lease,” she told Residential Property Manager.
Ms Levisohn said a lot of tenants are now educated with the status of the current market, and in a lot of instances are advising they would like to renew with a reduced rent.
Ms Levisohn also said that vacancy rates in her local Perth market were unlikely to get much worse.
“There is now a large amount of stock available. At December 2014 over 6,300 properties were on the market for rent. The same time in 2013 was around 4,500 and the year before just over 2,000,” she said.
[Related: Vacancies drop as renters return]