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Very tight rental markets across the smaller capital cities are offsetting the elevated rates still being seen across Melbourne and Sydney, recent data has shown.
SQM Research has found that the national residential vacancy rate decreased by 0.2 of a percentage point over January to 2.0 per cent or a total of 71,297 vacant residential properties. The result was lower than last year’s national average vacancy rate, which stood at 2.1 per cent.
Sharp falls in vacancies were recorded across Australia’s CBDs, where vacancy rates fell to 6.2 per cent after being as high as 16 per cent in May 2020.
All capital cities, except Hobart, recorded declines in vacancies over January.
Even without recording a fall, the Tasmanian capital still managed to record the lowest vacancy among all capital cities — at 0.6 of a percentage point.
This was followed closely by Adelaide with a 0.7 of a percentage point vacancy rate, and Perth, Canberra and Darwin with 0.8 of a percentage point.
The bigger capital cities saw higher vacancy rates, with Melbourne leading at 4.4 per cent, followed by Sydney with 3.2 per cent and Brisbane with 1.7 per cent.
Right now, Melbourne has the highest number of vacant residential properties sitting at 27,432, followed by Sydney with 24,309. The gap widens with Brisbane, which, at third place, only has 5,886 vacant properties.
Despite still-elevated levels of vacancy, SQM Research’s managing director, Louis Christopher, said that there is evidence proving that the worst is over for the Sydney and Melbourne rental markets.
“The falls in vacancy rates for the month in those two cities, combined with the increased tightness in other cities and regions, have now brought rental vacancy rates down to below where they were prior to the outbreak of COVID-19.”
However, the managing director was quick to point out that “there will not be a complete reversal of the sharp rise in rental vacancy rates experienced in these locations in earlier 2020”.
Rents
Capital city average asking rents increased by 0.7 of a percentage point for both houses and unit over the past 30 days to 12 February.
Median house rent now sits at $552 per week while median unit rent sits at $412 per week.
SQM Research revealed that the majority of capital cities recorded increases in both house and unit asking rents, with Sydney recording the highest increase of 3.2 per cent for houses and 2.2 per cent for units.
On the other hand, Melbourne continued to record declines for both house and unit rents, falling by 0.1 of a percentage point and 0.4 of a percentage point, respectively.
Across the capital city markets, Canberra recorded the highest median rent for both houses and units at $672 per week and $489 per week, respectively.
Meanwhile, Adelaide had the most affordable median house and unit rents at $425 per week and $317 per week, respectively.
Looking ahead
Despite promising movements in capital city rental markets, Mr Christopher said that the impacts of the pandemic might still be felt in the coming months.
“Demand for inner-city property will remain affected by the closure of the international border as well as ongoing caution on future city lockdowns,” he suggested.
“This will mean 2021 will remain largely a tenant’s market in the inner cities, but will also very much remain a landlord’s market for regional Australia.”
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