- The third consecutive monthly fall
- Darwin and Hobart the only cities to record a rise last month
- Melbourne's 3.6% rate is a far cry form the peak of 5.4% recorded last year
Domain has released its latest vacancy rates for June 2020 which has shown the rate is at its lowest point since Domain’s records began in 2017.
Nationally, the vacancy rate fell to just 1.6% – the third consecutive monthly fall.
The monthly drop was fuelled by Melbourne as the rental market recovers from a pandemic-induced bounce in vacant rental properties. The rates also fell in Sydney and Adelaide, while remaining steady in Brisbane, Perth and Canberra.
Darwin and Hobart were the only two capitals to have witnessed a rise in vacancy rates last month.
“All cities have returned to vacancy rates that are lower than pre-pandemic levels reported in February 2020, except Melbourne and Sydney,” said Dr Nicola Powell, Domain’s Senior Research Analyst.
“However, the number of empty rentals have reduced significantly in Sydney and Melbourne.
“This will boost confidence among landlords, as renters face increased competition among remaining rental listings, but there will be some areas that will have elevated vacancy rates until international borders reopen.”
Dr Nicola Powell, Domain Senior Research Analyst
The low vacancy rate means all cities apart from Sydney and Melbourne are seeing rates remain tight. Sydney’s vacancy rate is 2.6% – the same as February 2020.
The fall in empty rental listings in Sydney was caused by apartment-dominated regions such as Parramatta, Sydney Inner City, Strathfield-Burwood-Ashfield and Eastern Suburbs- South.
“This could reflect a shift of renters to areas that had seen more substantial declines in asking rents, the repopulation of our inner-city areas, or some investors opting to sell,” said Dr Powell.
Melbourne’s rate of 3.6% represents a 1.8% fall in six months and a far cry from the 5.4% peak at the end of 2020.
At the end of June, Melbourne had just over 20,500 vacant rentals – double the pre-pandemic volume.
Similar to Sydney, the fall in rental listings were mostly in the inner city and around university campuses. Melbourne City, Monash, Stonnington West, Boroondara and Yarra witnessed the largest declines.
“Vacancy rates remain elevated in these areas, but it signals conditions are improving for landlords; tenants should utilise current conditions to negotiate while they can.”
Dr Powell said vacancy rates remain tight in the smaller capital cities, leading to higher rents. Currently, Brisbane and Adelaide vacancy rates are at their lowest on Domain’s records with Perth and Darwin nearing their lowest points.
Dr Powell said the length of the lockdowns will determine the impact on the overall rental market
“With many states recently recording cases of community transmission of COVID-19, the introduction of lockdowns and heightened restrictions will put a dent in confidence,” she said.
“If Melbourne’s experience is a reference of what is likely to happen, vacant rental listings may increase in regions with a high proportion of people working in the hospitality and tourism sectors. Tenants who continue to suffer a significant reduction in hours may be forced to cut costs and move in with family or friends.”
SQM Research supports Domain’s records of a tightening vacancy rate – albeit they show a 1.8% vacancy rate overall, not quite the lowest ever. April 2006 saw an incredible 0.8% vacancy rate nationally, according to SQM.