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  • Writer's pictureKBRZ

The National Vacancy Rate has Dropped to an All-time Low of 1 %

According to Domain data, rental supply fell in the past March as the return of international students drove up demand.

Domain head of research and economics Nicola Powell mentioned that the share of homes available for rent in Australia's capital cities had fallen below 2 per cent, signaling a market shift in favour of investors.

"All capital cities are now experiencing landlord markets for the first time since Domain began recording in 2017."

"Just a month after the opening of international and domestic borders, we are already seeing increased pressure on an already tight rental market."

"Many tenants have also moved back to inner cities where apartments are cheaper than houses, leading to a recovery in rental demand."

"This phenomenon is particularly pronounced in Sydney and Melbourne, which again recorded the largest drop in vacancy rates."

Sydney's vacancy rate fell to 1.4 per cent, the lowest since Domain records began, while Canberra and Perth also hit record lows of 0.5 per cent.

Adelaide's vacancy rate of 0.2 per cent was the lowest of any capital city since Domain began tracking the series.

In Melbourne, the vacancy rate fell to 1.8 per cent, also hitting a new low since the start of the Covid-19 pandemic.

Terry Ryder, director of property research firm Hotspotting, said the nation's rental market was experiencing a chronic shortage of rental listings, which would drive rents to record highs.

"Through the industry norm, a 3 per cent vacancy rate represents a balanced market, meaning supply is at a reasonable level and rents are stable," he said.

"Once the vacancy rate starts to drop below 3 per cent, the market goes into a shortage of rental listings; once the vacancy rate drops below 2 per cent or 1 per cent, as we're seeing across Australia now, you enter a long-term In areas that are undersupplied, rents will rise strongly.”

  • For March 2022:

In Sydney, the number of rental listings fell 12.4 % to 8376 in March; Melbourne fell 12.5 % to 9228; Brisbane fell 20.4 % to 1635 and Adelaide fell 31.5 % to 241. Australia's total inventory of properties for rent in March fell by 12.9% to 25,184.

  • For past 12 months:

Melbourne dropped 56.9 per cent, Sydney 48.9 per cent, Brisbane 49.9 per cent and Adelaide 68.6 per cent. Nationally, stock levels of properties for rent fell by 52.2 per cent over the year.

Asking rents have soared to record highs as rental listings tighten, and rents are likely to continue climbing in the coming months, Powell said.

"Rent asking prices are at record highs in many cities, and the current tightening market conditions are tilting towards landlords and driving a trend of possible future rent increases," she noted.

  • Overall median house rents in the capital cities hit a record high in the fourth quarter of last year.

Sydney was up 9.1 per cent to $600, Brisbane was up 12.9 per cent to $480 and Adelaide was up 9.8 per cent to $450.

In some areas, such as Vaucluse and Double Bay in Sydney's east, house rents soared by 47 per cent and 42.9 per cent respectively over the year.

In Mount Coolum on the Sunshine Coast, strong demand for listings and lower supply drove 12-month rent levels up 47.1 per cent.

"In all my time studying the housing market, never has vacancy rates been this low and rents are rising as fast as house prices in so many areas," Ryder said.

"The rental crisis is worsening as a series of policies from the government, APRA and banks have been preventing investors from entering the property market.

"Both the Federal Government and the Opposition have policies on housing affordability to help first-home buyers enter the housing market, but there seems to be little to address the rental shortage, which I think is a bigger crisis."


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