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Renters facing a tight changeover period as vacancy rates remain low

The traditional summer changeover period is shaping up as an incredibly challenging period for renters, with the latest vacancy data showing supply remains at record low levels.

According to Domain’s latest Vacancy Rates Report for November 2023, the national vacancy rate remained at 0.8 per cent for the third consecutive month, leaving renters with few choices.

Domain’s Chief of Research and Economics, Dr Nicola Powell, said nationally, the average views per rental listing declined in November, indicating a slight easing of demand relative to total supply

However, as the rental market changeover period begins, it is forecast to be the most competitive on record given the historically low rental stock. 

“While the rental market continues to be a landlord’s market, we are seeing signs of stabilising conditions in some markets – Sydney, Melbourne and Brisbane experiencing a slight increase in vacancy rates,” Dr Powell said.

“In the upcoming months, while we do expect to see a seasonal lift in vacancy rate as rental supply traditionally increases, it will be met with higher demands as the changeover period kicks off.”

Dr Powell said Sydney’s vacancy rate increased from the previous month’s record low to hit 1 per cent. 

“This is the first monthly rise since June, driven by a surge in rental supply,” she said.

“Average views per rental listing have declined over the month, highlighting potential relief. 

“However, there needs to be a seismic shift in supply to see significant improvements for tenants.”

Melbourne’s vacancy rate rose to 1 per cent, marking the first monthly increase since June, driven by a boost to rental stock.

It was also supported by a fall in average views per rental listing, showing a marginal fall in demand. 

Brisbane has seen its second successive monthly rise in vacancy rates to sit at 0.9 per cent. 

This is an 11-month high, indicating its rental market is stabilising and moving away from the highly competitive conditions and record low vacancy rate last seen in February. 

Perth’s vacancy rate remained steady for the fourth month in a row, at 0.3 per cent, and remains at a record low level.

It is one of two of the most competitive cities for potential tenants highlighting the need for more rental stock, Dr Powell said.

Adelaide remains the other most competitive city for potential tenants, with the vacancy rate steady for the fourth consecutive month, at 0.3 per cent – slightly above its lows.

Darwin’s vacancy rate has jumped to 1.5 per cent, the largest monthly change of the capital cities. 

This is the highest vacancy rate since July 2020 and it is the highest of the capitals, rising above Canberra this month. 

This is supported by a drop in average views per rental listing, at its lowest point since the onset of the COVID-19 pandemic Dr Powell said.

Hobart’s vacancy rate also dropped for the fifth successive month, to 0.9 per cent, reaching the lowest level since March 2023. 

It is now the third-lowest of the capitals, a remarkable shift away from its status as the second-highest vacancy rate in September. 

While Canberra’s vacancy rate has fallen to 1.4 per cent and is now the second highest of the capital cities. 

This is the lowest it has been in a year, however, conditions remain less competitive for tenants relative to other capitals.

Dr Powell said this year had been incredibly tough for renters.

“In 2024, we do anticipate the rental market to reach a tipping point driven by stretched affordability,” she said.

“More renters opting for house shares and first-home buyer incentives will help transition some to being owners or fast-track others to a more affordable purchase.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.