Renters feel the pinch as vacancy rates drop back to record lows

There’s still no relief in sight for renters with vacancy rates returning to record low levels across the country.

Domain’s January Rental Vacancy Rate Report found after a seasonal rise in December, the national vacancy rate is back to its lowest point on record, at 0.8 per cent.

Across the country, there are 36.1 per cent fewer vacant rental properties compared to this time last year, with vacancy rates falling in all capital cities except Hobart.

Domain Chief of Research and Economics, Dr Nicola Powell said the influx of migrants, coupled with low supply, has hit renters hard.

“Low supply is driving a landlords’ market across all capital cities, worsening an ongoing rental crisis in many parts of the country,” Dr Powell said.

“The continued growth in asking rents, along with increasing demand, exacerbates a highly competitive environment for tenants.”

Jan-23 Dec-22 Jan-22 Monthly change Annual change
National 0.8% 1.1% 1.3%
Combined capitals 0.9% 1.1% 1.6%
Combined regionals 0.8% 0.9% 0.6%
Sydney 1.0% 1.4% 1.9%
Melbourne 1.0% 1.4% 2.7%
Brisbane 0.8% 0.9% 1.0%
Perth 0.3% 0.4% 0.5%
Adelaide 0.3% 0.4% 0.3%
Hobart 0.5% 0.4% 0.2%
Canberra 1.5% 1.7% 0.7%
Darwin 1.3% 1.4% 0.9%

Source: domain

Sydney and Melbourne at a low point

The vacancy rate in Sydney and Melbourne dropped to just 1 per cent in January, which is a record-low level for both markets.

Across Sydney, median house rents remained steady over the quarter, at a record high, while unit rents surged 4.5 per cent over the quarter and continue to outpace houses.

This is driven by the decline in rental stock, which was at a record low for the month of January, tracking 44 per cent lower annually according to the report.

Melbourne’s vacancy rate has tumbled from 5.6 per cent in December 2020, to the current record lows.

Brisbane’s vacancy rate (0.8 per cent) dropped this month but remains high compared to most of 2022.

This drop is driven by a fall in the number of vacant rental listings, but it appears to be moving away from the highly competitive conditions tenants saw last year the report said.

Perth and Adelaide remain the most competitive cities for potential tenants, with both seeing a decline to 0.3 per cent.

Perth is at a record low, while Adelaide is 0.1 percentage points higher than the record low of 0.2 per cent last seen in October 2022.

Both cities’ rental stock declined annually and are at all-time lows for the month of January.

Darwin and Canberra’s vacancy rates fell in January but remain higher compared to the same time last year.

Hobart was the only city to see a monthly rise in its vacancy rate – a six-month high.

This was driven by a boost in rental listings both monthly and annually, which are at their highest point since December 2020.

Dr Powell said changes to China’s education policy and the influx of students were likely to add more pressure to the rental market in the months ahead.

“Demand pressures have been fuelled by the return of international and domestic travel, overseas migration, foreign students, and the recovery of temporary visa holder numbers,” she said.

“Recent changes by China’s Ministry of Education to stop acknowledging degrees gained online will also see a surge in demand for rentals as students return for in-person classes.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.