Rental vacancy rates around Australia continue to be low and will probably tighten further over 2022, with a new report signaling good returns for investors but terrible tidings for tenants.
Although the number of available rentals rose slightly in December, that is more a reflection of the traditional rental changeover period with the end of leases and increased choice overall, according to Domain’s monthly Rental Vacancy Rate Report.
With the national vacancy rate at 1.7 per cent in December – down nearly a third from 2.4 per cent this time last year – the general trend is for a decline in the new year as January’s typically strong demand puts the squeeze on available supply.
“We have seen the vacancy rate increase in most capital cities, except for Hobart and Adelaide, but then it’s expected to come back down,” said Domain chief of research and economics, Dr Nicola Powell. “It means that in some areas of Australia, particularly the smaller markets, it will be well-nigh impossible to find a home to rent.
“In most of the country, it’s a landlord’s market, which we say is when the rental vacancy rate is below 3 per cent, and in some areas there’s definitely a rental crisis. But Sydney and Melbourne have the most fragmented markets, with some suburbs much easier to find rentals in than others.”
The number of vacant properties nationally has shrunk from 54,000 dwellings in December 2020 to 37,000 in December 2021, a 31 per cent reduction, which will further serve to depress the rental vacancy rate.
That remains most taut in Hobart, at its continued historic low of 0.3 per cent, down from 0.5 per cent in December 2020. In Adelaide, it’s not much better at 0.4 per cent, three points lower than last year’s 0.7 per cent. Perth is only marginally higher at 0.6 per cent, compared to 0.9 per cent 12 months ago.
In Canberra, the rental vacancy rate is sitting at 1 per cent, as against 1.3 per cent last year, and in Brisbane at 1.3 per cent, down from 1.8 per cent. Darwin had the same rate of 1.3 per cent but was the only city to see an actual rise since last year, when it sat at just 1 per cent.
Compared to those, Sydney has a higher vacancy rate of 2.6 per cent, although much less than the 3.7 per cent recorded in December 2020, while Melbourne has the country’s highest rate overall of 3.2 per cent, down from 5.2 per cent.
“The smallest markets seem to be the ones most affected,” Dr Powell said. “Anyone trying to secure accommodation in Hobart is having huge problems, and especially those on lower incomes. It’s now been tight for some time.
“Adelaide is also hard, with its vacancy rate holding steady at its lowest point since Domain records began in 2017. Perth has had a real turnaround with the impact of the state border being closed for so long, and the impossibility of interstate migration and the end of fly-in, fly-out working.”
Sydney’s vacancy rate of 2.6 per cent is the highest level it’s been since May 2021, but at the same level recorded in March 2020. That was just before COVID-19 affected the city and caused a major surge in the vacancy rate. At the end of December, there were just over 15,000 vacant rental listings.
Different areas of Sydney often have marked differences in the number of homes for rent. The lowest number of listings are now in Camden, in the city’s south-west, at 0.3 per cent, and the figure is 0.5 per cent in each of Richmond-Windsor and nearby Wyong on the Central Coast.
On the other hand, there’s better news for tenants wanting to live in Ku-ring-gai in the north, where the vacancy rate sits at 4.2 per cent, Canterbury in the south-west where it’s 4 per cent and Parramatta in the west at 3.9 per cent.
In Melbourne, the vacancy rate is down 2 percentage points from the peak of December 2020 following the extended lockdown. There were just over 16,000 estimated vacant rentals at the end of last month.
In the Melbourne CBD, the area worst hit by the pandemic where the vacancy rate almost reached 14 per cent last year, that’s now shrunk to 4.5 per cent.
“I think that’s a mixture of landlords having sold off property with little prospect of international students coming back again in the near future, and people having been cooped up during the lockdown,” Dr Powell said. “They’re seeing how much rents have fallen and how much bang they can now get for their buck, and are moving out of shared households, now able to afford to live on their own.” Vacancy rates are still tightest in the Mornington Peninsula at 0.4 per cent, Cardinia in the south-east at 0.6 per cent, and at 0.7 per cent in Sunbury and Frankston. They’re highest in Stonnington East at 6.3 per cent, Stonnington West at 5.3 per cent and Whitehorse West at 5.3 per cent.