While the national residential rental vacancy rate has remained steady, Melbourne and Sydney are still struggling through the pandemic’s effects.
SQM Research has found that the national residential rental vacancy rate was sitting at 2.0 per cent in February 2021 — a result that stands steady from a year ago. Currently, there are a total of 71,544 vacant rental properties across the combined capital cities.
Drilling down to each capital city, Melbourne and Sydney garnered results that “would be disappointing for existing property investors”, according to SQM Research managing director Louis Christopher.
Melbourne saw the highest vacancy rate over the month at 4.5 per cent or a total of 27,804 vacant rental properties. While this is lower than the December 2020 peak at 4.7 per cent, the current rate stood way higher than last year’s 1.9 per cent.
In the Melbourne CBD, vacancy rate is even higher at 7.5 per cent, albeit down from October 2020’s 9.4 per cent.
Mr Christopher said that Melbourne remains weighed down by the withdrawal of international students as well as the consistently underwhelming demand for rental accommodation since COVID-19 hit.
Meanwhile, in Sydney, vacancy rates over February 2021 sit at 3.3 per cent or 24,820 vacant rental properties, higher than last year’s 2.9 per cent.
In the Sydney CBD, the vacancy rate has dropped to 6.3 per cent, far lower than the May 2020 peak at 14.8 per cent.
“Normally, vacancy rates in these two cities fall over February, in part due to international students starting their semesters, but given the ongoing closure of the international border, the seasonal increase in rental demand has not occurred this year,” Mr Christopher commented.
“This year will favour tenants in the inner cities, but will also very much remain a landlord’s market in regional Australia.”
In other capital cities, vacancies remain tight, with Hobart sitting at only 0.6 of a percentage point or 194 vacant rental properties. This was followed by Darwin and Adelaide with 0.7 of a percentage point, Canberra with 0.8 of a percentage point, Perth with 0.9 of a percentage point and Brisbane with 1.5 per cent.
According to the managing director, tenants continue to show strong interest in larger properties across outer suburban locations and regional areas.
Over the month to 12 March 2021, national average asking rents rose 0.6 of a percentage point to $500 for houses and 1.6 per cent to $392 for units. This equates to an annual change of 11.1 per cent for houses and 7.4 per cent for units.
However, capital city average continues to see declines, with average house rents declining by -0.4 of a percentage point to $550 and average unit rents declining by -0.2 of a percentage point to $412. Over the year, these equal declines of -2.1 per cent and -6.6 per cent for houses and units, respectively.
Further reflecting oversupply in their rental markets, Melbourne and Sydney’s unit asking rents declined over the month by -1.4 per cent and -0.4 of a percentage point, respectively. This equates to a -12.2 per cent annual decline for Melbourne and -9.0 per cent annual decline for Sydney.
Meanwhile, house asking rents in Sydney also declined over the month by -1.2 per cent while Melbourne’s house rents rose by 0.1 of a percentage point. Over the year, Sydney and Melbourne’s house asking rents declined by -6.7 per cent.
But even despite the city’s struggles, as of March 2021, Sydney remains the most expensive rental market for houses, with the average asking rents at $654.90.
Canberra is currently the most expensive for unit rentals, with the average asking rent at $494.3.
On the other hand, the most affordable rental market for both houses and units is Adelaide, with the average asking rents at $427.90 and $324.10, respectively.
Elsewhere, Canberra emerged as a winner, with a 25 per cent annual increase in house asking rents.
Perth, meanwhile, saw a 12.8 per cent increase in house asking rents and a 10.2 per cent increase in unit asking rents over the year.