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Seasonal vacancies jump not to be mistaken for easing rental crisis

By Kyle Robbins
17 January 2023 | 10 minute read
louis christopher sqm research reb sezdqy

New findings from SQM Research have painted a clear picture of the current state of the nation’s rental crisis.

While the firm’s December 2022 data revealed national vacancy rates jumped to 1.3 per cent from the 1 per cent recorded a month earlier, it warned this was a seasonal increase as international and final-year university students end their tenancies, rather than a sign of a loosening rental market.

The total number of available rentals across the country was 39,568 during the concluding month of 2022, a slight increase of 31,924 the prior month.

Vacancy rates rose across Sydney — from 1.4 per cent to 1.8 per cent — Melbourne (1.5 per cent to 1.7 per cent), Brisbane (up 0.3 per cent to 1.1 per cent), Canberra (1.4 per cent to 1.9 per cent), and Darwin, where they rose from 1.2 per cent to 1.5 per cent.

However, in Adelaide (0.5 per cent), Perth (0.6 per cent), and Hobart (0.6 per cent), vacancy rates rang the new year below 1 per cent.

When compared to December 2021, only Canberra and Hobart reported vacancy rate increases, while Darwin’s and Adelaide’s remained unchanged.

Sydney boasted the most vacant rentals — 12,553 — followed by Melbourne’s 8,805 and Brisbane’s 3,603.

Vacancy rates in the harbour city’s central business district climbed to 3.6 per cent. Similarly, Melbourne and Brisbane CBDs experienced an increase to 3.3 per cent and 1.8 per cent, respectively.

Louis Christopher, managing director at SQM Research, said the rise in rental vacancies “should quickly turn over in January and February in particular — normally a time when rental demand surges and there is short supply”.

Moreover, the organisation found that in the 30 days to 12 January 2023, capital city rents rose 2.2 per cent as part of a 24.6 per cent increase across the 12 months. Additionally, national rents across all regions climbed 18 per cent during the 12-month period.

Nationally, median weekly dwelling rents now sit at $556.72 per week, led by the $899.98 weekly charge for Sydney houses. Adelaide units offer the most affordable rental prospect, with median rents at $395.93.

Mr Christopher explained, “we are just not seeing any relief on rents.” Though he did express optimism for later in the year for rental market stabilisation “once we see higher completion rates and a slowdown in housing formation”.

“On the flip side, the surge in rents is pushing up rental yields, especially with falling prices. I believe ‘would-be’ investors will be attracted to higher rental yields in later 2023, once we see a pause in cash rates,” he concluded.

Seasonal vacancies jump not to be mistaken for easing rental crisis
louis christopher sqm research reb sezdqy
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