There’s no relief yet for tenants who are struggling to find a property to rent, with the rental vacancy rate remaining at a record low 0.8 per cent.
Domain’s latest Vacancy Rates Report October 2023 found the national vacancy rate remained unchanged from last month, with concerns growing about a lack of options ahead of the transitional changeover period during the summer.
Across the country, some capital cities saw a marginal improvement, with Brisbane’s vacancy rate climbing to 0.8 per cent from 0.7 per cent, while Darwin saw a bigger increase to 1.2 per cent, up from 0.7 per cent.
Domain’s Chief of Research and Economics, Dr Nicola Powell said surging immigration continues to stifle rental markets.
“The vacancy rate has held at this record low for the second consecutive month, with strong overseas migration and higher property prices pressurising demand at a time rental properties are chronically undersupplied,” Dr Powell said.
“Dwindling rental stock has visibly suffered because of a lack of investor activity, ongoing development undersupply and higher construction costs.”
According to the report, Sydney’s vacancy rate held steady at a record low of 0.9 per cent, driven by an all-time low in rental supply.
Sydney is also the city with the biggest impact from immigration, receiving the bulk of new overseas migrants.
Melbourne’s vacancy rate was also steady at 0.9 per cent, 0.1 percentage points off the record low last seen in March 2023.
Meanwhile, Brisbane was one of two cities to see a rise in vacancy rates, sitting at 0.8 per cent, up from 0.7 per cent.
“It has seen little movement in the last six months compared to the other capitals,” Dr Powell said.
“This indicates the rental market is stabilising, shifting away from the highly competitive conditions and record low vacancy rate last seen in February.”
Perth and Adelaide both have the tightest conditions in the country, with the vacancy rate sitting at an incredibly tight 0.3 per cent.
Hobart’s vacancy rate declined for the fourth consecutive month, to 0.9 per cent.
Its vacancy rate is now the third-highest of the capitals, and this is the lowest vacancy rate since March 2023.
Canberra’s vacancy rate is steady at 1.6 per cent, the highest out of all the capital cities.
While Darwin’s vacancy rate has jumped to 1.2 per cent, the largest monthly change out of the capital cities.
It has the highest vacancy rate and rental stock since February 2022.
Dr Powell said there are concerns as we head into summer – the time of year when most tenants move.
“While the current vacancy rate is holding steady, the record low rate is concerning for tenants with the changeover period just around the corner,” she said.
“This limits their options, keeps competition tough, and can lead to higher rent costs, added stress during the transition, and weakened negotiating power for tenants.
“While we anticipate a seasonal increase in rental supply in the coming months, this is shaping up to be one of the most challenging peak changeover periods tenants have ever experienced.”
She said nationally, the number of vacant rental listings is also at an all-time low.
“An additional 40,000 to 70,000 rentals are needed to restore balance to the rental market and achieve a healthy vacancy rate of 2-3 per cent in Australia,” she said.
“While there is no quick fix to address affordability challenges, it is crucial that we implement policies that encourage investors to enter the market.”