The number of vacant rental properties across Australia has increased, improving conditions for renters looking for a home.
The national vacancy rate rose to 1.42% in June according to PropTrack, increasing by 0.09 of a percentage point over the month and 0.29ppt over the quarter to sit exactly where it was a year ago.
This was the fourth consecutive monthly increase in the vacancy rate, with vacancies rising as more property investors enter the market, boosting the number of homes available to rent.
Renters have endured very tough conditions recently, with the national vacancy rate hitting a record low of 1.09% in February after hovering just above 1% since late last year.
While increasing vacancies would come as welcome news to renters seeking a place to live, PropTrack senior economist Anne Flaherty said conditions were still very tight.
“Despite the increase seen in recent months, vacancy remains well below pre-pandemic levels, with 43% fewer vacant properties in June compared to March 2020.”
Rental vacancies have increased for four consecutive months, improving conditions a little for renters seeking a home.
While the vacancy rate has increased, it’s still well below the 3% that is considered a a “healthy” vacancy rate, which would mean there is an appropriate balance between the availability of rentals and tenant demand.
The vacancy rate hasn’t been above 3% since April 2020, according to PropTrack data, when lots of people left Australia as the pandemic began, causing a sudden increase in vacancies.
Increased investor activity pushes up vacancies
Higher levels of investor activity over the past year have contributed to an increase in the number of available rentals, Ms Flaherty said.
The latest data from the Australian Bureau of Statistics shows the value of investor lending is almost 30% higher than a year ago, with growth in investor loans outpacing that of owner-occupiers over the past year.
Even though increased investor activity has boosted the number of available rentals, vacancies are expected to remain low for some time, given Australia’s ongoing housing shortage, Ms Flaherty said.
“Despite the recent easing in vacancy rates, the chronic undersupply of rental properties is likely to continue over the next few years.”
“Development activity is lagging population growth, with the shortfall in new housing worst in WA, Queensland, and NSW.”
While vacancies have increased, new housing construction isn’t keeping pace with population growth, which will likely contribute to ongoing tightness in the rental market. Picture: Getty
PropTrack data shows rents have kept rising despite the increase in vacancies, with the median weekly rent across the capitals increasing by 3.2% in the three months to June and 10.3% over the past year.
Apartment rental prices in the capitals climbed 3.3% over the quarter while house rental prices remained flat, narrowing the gap between house and unit rental prices in the capitals to just $30.
Where vacancy rates have eased the most
Across the capitals, the vacancy rate rose 0.11ppt in June to 1.46%, but vacancies have increased in some cities more than others.
In Sydney, the vacancy rate rose by 0.2ppt last month to 1.68%, which was the city’s highest vacancy rate in more than 18 months. Nonetheless, Sydney’s median weekly rental price is still 8.8% higher than a year ago.
Sydney’s rental vacancy rate is now the highest it’s been in 18 months. Picture: Getty
Melbourne’s vacancy rate reached 1.5% after a 0.12ppt increase in June, which was the highest level in a year. However, the city’s median rent is up 10.6% compared to a year ago.
Brisbane recorded a 0.05ppt increase in the vacancy rate over the month to 1.2%.
Canberra has the highest vacancy rate of the capitals at 1.81% after a 0.04ppt increase in June, with rental prices remaining steady over the past year.
Perth had the largest increase in vacancies over the past year, rising by 0.27ppt to 1.25%. While this is an improvement over a year ago, it still indicates a very tight market.
“Perth has seen the largest increase in vacancy over the past year, due to a surge in investor activity in the state which has contributed to a rise in the number of rentals,” Ms Flaherty said.
The value of investor lending in Western Australia increased by about 74% over the year to May 2024, ABS data shows, fuelled by an influx of interstate investors seeking attractive rental returns and capital growth.
Vacancies have increased in Perth more than any other capital over the past year, but rents have also surged, making it the second-most expensive city to rent after Sydney. Picture: Getty
PropTrack data shows property prices in Perth rose by 23% over the past year — faster than in any other capital — while a recent analysis shows many suburbs of Perth offer gross rental yields above 6% for houses and 7% for units.
However, rising vacancies in Perth haven’t yet translated to lower rental prices, with the city’s undersupply of rental accommodation causing the median weekly rent to rise 18% over the year to $650, making it the second-most expensive city to rent behind Sydney.
Adelaide had the lowest rental vacancy rate of the capitals at just 1.13%. However, this was 0.23ppt higher than a year ago.
The rental market is almost as tight in Darwin, with the vacancy rate sitting at 1.15% after plummeting 0.41ppt in June.
Hobart’s vacancy rate is now 1.28%, down 0.51ppt compared to a year ago.
Meanwhile, the vacancy rate across regional Australia is sitting at 1.31%.
“While vacancy across the capital cities increased over the month, the regional vacancy rate held relatively steady,” Ms Flaherty said.
“Regional vacancy is now lower than combined capital cities.”
Source: realestate.com.au
