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Rental vacancy rates have fallen across Australia’s capital cities, indicating that the worst of the COVID-19-induced downturn could be over for landlords, a new report has revealed.
The latest figures from Domain have shown that the national vacancy rate is now below pre-pandemic levels. It’s dropped to 1.8 per cent in April 2021 — the lowest since March 2020 — following three consecutive months of steady rates.
Every capital city, except Melbourne, saw an annual decline, with Hobart recording the lowest vacancy rate at 0.5 of a percentage point, followed by Adelaide and Darwin at 0.6 of a percentage point, and Canberra and Perth at 0.8 of a percentage point.
Brisbane, Sydney and Melbourne have trended higher, with vacancy rates sitting at 1.4 per cent, 1.8 per cent and 4.2 per cent, respectively.
According to Domain’s senior research analyst, Dr Nicola Powell, the sustained low vacancy rates across the smaller capitals mean that conditions will remain tight for tenants, with strong competition putting pressure on asking rents.
Lowest and highest vacancy rates in each capital city
|
Capital city |
Lowest vacancy rate
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==
|
Highest vacancy rate |
|
Sydney |
Camden (0.3%) |
Auburn (4.8%) |
|
Melbourne |
Mornington Peninsula (0.2%) |
Melbourne City (10.2%) |
|
Brisbane & Gold Coast |
Capalaba (0.2%) |
Brisbane Inner (3.8%) |
|
Perth |
Wanneroo (0.3%) |
Perth City (1.6%) |
|
Adelaide |
Tea Tree Gully (0.2%) |
Adelaide City (4.6%) |
Melbourne and Sydney recover
While Melbourne’s vacancy rate did increase annually, it recorded the biggest reduction over the month — from 4.6 per cent in March 2021. The Victorian capital also recorded its lowest vacancy rate since September 2020, and although it remains higher than pre-pandemic levels, the current rate was significantly lower than the 5.4 per cent peak in December 2020.
“Melbourne’s rental market has been affected by two lockdowns in 2020 that resulted in the vacancy rate bouncing twice, the second time higher than the first,” Dr Powell noted.
Of the capital cities, only Sydney recorded a monthly decline along with Melbourne.
In contrast, Perth, Hobart and Canberra’s vacancy rates all increased from March 2021, while Brisbane, Adelaide and Darwin held steady at multi-year lows.
Ultimately, rental conditions have been shifting across Sydney and Melbourne after they bore the brunt of the impacts of COVID-19, particularly the decline in interstate and overseas migration due to travel restrictions, according to Dr Powell.
Looking ahead, she expects conditions to improve for landlords as vacant rental listings start to decline in these capital cities, flagging that Melbourne and Sydney are both dominating the top 20 areas experiencing a fall in vacant listings.
“In fact, the regions with the largest fall in rental listings are largely situated within inner-city regions and close to universities with a large concentration of apartments and share houses — a sign that people may in fact be returning to our cities,” Dr Powell added.
Top 20 areas with biggest drop in vacant rentals
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