- Domain reports the national vacancy rate is back to its lowest point on record, at 0.8 per cent.
- Tight supply combined with already high levels of immigration is weighing on rental markets.
- Continued growth in asking rents, along with increasing demand, exacerbates the strain for tenants.
Renters around Australia are continuing to be stretched to their limit as vacancy rates once again drop back to record-low levels.
Domain’s January Rental Vacancy Rate Report has found that after a seasonal rise in December, the national vacancy rate is back to its lowest point on record, at 0.8 per cent.
Vacancy rates are again at a record low level in Sydney, Melbourne, Perth and nationally, with all cities except Hobart recording a drop in their vacancy rate in January.
Domain Chief of Research and Economics, Dr Nicola Powell said tight supply combined with already high levels of immigration is weighing on rental markets.
“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.
Packed capital cities
Conditions for renters remain extremely tight in Sydney and Melbourne, with both cities seeing the vacancy rate fall to a record low of 1 per cent.
In Sydney, tight vacancy rates are putting upward pressure on rents with unit rents jumping 4.5 per cent over the quarter, while house rents remained steady.
According to the report, 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
Meanwhile, Melbourne’s vacancy rate has dropped from 5.6 per cent in December 2020, to the current record lows.
It continues to see the most significant annual fall in rental listings of all the capitals, down 61 per cent annually and an all-time low for the month of January.
Brisbane’s also vacancy rate 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 which tenants saw last year the report said.
Perth and Adelaide saw a decline in vacancy rates in January and are the most competitive cities for potential tenants, at 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 on an annual basis.
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.
Students on their way back
Dr Powell said there’s likely to be an influx of students this year, which will put rental markets under even more pressure.
“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.”
