New Domain data shows national rental vacancy rates are the lowest on record.
In June, the national rental vacancy rate dropped for the third consecutive month to 1.6 per cent. This is the lowest point since Domain records began in 2017.
The national decline has primarily occurred due to drops in Sydney, Melbourne, and Adelaide.
Domain explained Melbourne accounts for a large portion of the monthly drop in the national vacancy rate, as the city continues to see a steady rental recovery from the COVID-19-induced jump in the number of vacant rental properties.
The shrinking supply of estimated vacant rentals fell by a further 6.4 per cent over the month.
The city has seen considerable improvements, compared to six months ago. At the end of last year, Melbourne’s suburbs saw a record-high median peak of 5.4 per cent late last year.
In May 2021, Melbourne’s vacancy rates tightened to 3.8 per cent. In June, it tightened further to 3.6 per cent.
Melbourne had just over 20,500 estimated vacant rentals at the end of June, which, although significantly lower than last year, was still roughly double the pre-pandemic volume.
Domain senior research analyst Dr Nicola Powell noted the suburbs with the largest declines were frequently near university campuses.
The largest declines were found in Melbourne CBD, Monash, Stonnington West, Boroondara and Yarra.
Sydney saw vacancy rates fall to 2.6 per cent in June. This is the same as pre-pandemic rates (February 2020). Empty rental numbers fell by a further 3.8 per cent over the month.
Dr Powell saw the most substantial falls in the regions of Parramatta, Sydney Inner City, Strathfield-Burwood-Ashfield, Auburn and Eastern Suburbs-South.
She suggests this could be due to potential tenants finding rental opportunities in more affordable areas, people seeking homes in the inner-city or investors opting to sell.
Meanwhile, vacancy rates were maintained in Brisbane, Perth and Canberra.
Hobart and Darwin actually recorded a rise in the vacancy rates last month.
Dr Powell believed this was a good sign for tenants, as more vacant rentals were on the market. However, while there was a rise, the market is still very competitive.
Excluding Melbourne and Sydney, all cities have returned to vacancy rates that are lower than pre-pandemic levels (February 2020).
However, Brisbane and Adelaide vacancy rates are at their lowest since Domain started recording data in 2017. Perth and Darwin are also close to their lowest points on record.
Canberra remains at a low, which it has held over the years.
Dr Powell foreshadowed tenants who continue to lose work hours (and no longer have the same level of government support) may be forced to cut costs, including sharing accommodation.
Meanwhile, Melbourne’s experience is a reference of what is likely to happen across the country.
Dr Powell notes it is likely vacant rental listings may increase in regions with a high proportion of people working in the hospitality and tourism sectors, according to the new data.
Prominent tourist regions are also likely to remain weak, as there is more short-term rentals in those areas that will remain vacant.