- National rental vacancy rate rises to 0.9% from 0.8%
- Vacancy rates improve in major cities, conditions stabilising
- Increase in immigrants may pressure rental market
In some good news for tenants, the percentage of available rentals around the country has increased for the first time since December 2022, according to Domain.
Domain’s May Rental Vacancy Rate Report revealed that the national vacancy rate edged up to 0.9% last month, from the record low level of 0.8%.
Outside of the seasonal December bounce, this is the first monthly increase since October 2020.
Vacancy rates increased over May in Sydney (1.1%), Brisbane (0.8%), Canberra (1.8%) across the combined capitals (0.9%) and combined regionals (1.0%), while all cities are now moving away from record lows.
Across Melbourne (0.9%), Perth (0.4%), Hobart (1.1%) and Darwin (0.7%), vacancy rates remained steady.
Conditions improving
Domain’s Chief of Research and Economics, Dr Nicola Powell said while Australia remains a landlords’ market, this monthly rise and the previous stretch of steady vacancy rates over the last twelve months suggest conditions are beginning to marginally improve for tenants.
“It remains a challenging and competitive environment for tenants but the recent performance of vacancy rates show conditions have stabilised for now,” said Dr Powell.
“This is due to the steady increase in housing supply across most capital cities as some tenants revert back to house shares to cut costs or buy their first home earlier.
“But even with some extra available supply, the rental market still needs some huge changes to balance market conditions.”
Dr Nicola Powell, Domain’s Chief of Research and Economics
Dr Powell said the steady increase in supply across most capital cities this year has seen improvements in vacancy rates but the ongoing rental crisis remains as rates remain low.
She said the majority of cities are continuing to rise or stabilise, so if this trend continues, it could indicate a turning point for the broader rental market.
Vacancy rates increasing
According to the report, Sydney’s vacancy rate increased for the second successive month, to 1.1%, driven by the steady rise in rental supply over the past few months, despite tracking lower annually, down 15%.
Melbourne’s vacancy rate remains steady at 0.9% in May, which is down 50% from the same time last year, showing the strength of the rental market and the mismatch between supply and demand. It continues to see the greatest annual fall in rental listings of the capitals, down 46.7% annually and at an all-time low for May.
Rental vacancy rate, Melbourne
Brisbane’s vacancy rate increased to 0.8%, driven by the jump in the volume of vacant rental listings over the month and annually. However, the rental market is still moving away from the highly competitive conditions and record low vacancy rate last seen in February.
The report said Perth’s vacancy rate was steady for the third consecutive month at 0.4%, however, vacant rental listings are up over the month but remain lower annually.
Rental vacancy rate, Perth
Adelaide remains the most competitive city for potential tenants, at 0.3%. Adelaide saw a decline in its vacancy rate as rental supply dropped over the month.
Darwin’s vacancy rate is steady but remains higher annually, driven by a marginal fall in the number of vacant rental listings in May but increasing over the year. The vacancy rate remains 0.2 percentage points off the record low last seen in June 2022.
Hobart is also steady at 1.1% and just off the record high seen in April 2020. There was a boost in rental listings both monthly and annually. It’s at its largest level of stock in three years and is more than triple the number of listings of May 2022, indicating continued improvement in conditions for tenants.
Meanwhile, Canberra’s vacancy rate increased in May and is more than double the same time last year. It is at a record high of 1.8%, last seen in December 2019. The number of vacant rentals is steady over the month but is seeing more than double the number of listings compared to last year. The continual rise in vacancy rates indicates an easing of conditions for tenants.
The volume and change of vacant rentals
Immigration continues to hurt renters
Dr Powell said that while conditions were improving, the government’s bid to bring in over 700,000 immigrants in the next few years, will mean that pressure on rental markets will remain high.
“The continued flow of international migration and an unclear plan for building new homes and infrastructure to support this mean that while good news for the interim, the reprieve may be short-lived.”
