- Melbourne's vacancy rate rose to 4.5% according to SQM data
- Sydney performed poorly, albeit not as bad as Melbourne
- The national vacancy rate remains steady however, at 2.0%
Melbourne’s vacancy rate edged higher to 4.5% in February, the highest of any capital city in the nation according to SQM Research.
Although not as bad as 4.7% in December 2020 – which was the highest level recorded since SQM started measuring data in 2005 – Melbourne has continued to struggle in light of greater buyer preference for residential housing.
The shift in demand away from rental units and into detached housing has caused an oversupply in the city, with asking rents declining by 1.4%.
The withdrawal of international students hit Melbourne CBD the hardest, with the vacancy rate now at 7.5% (although this is down from 9.4% in October 2020).
Sydney’s rental market situation also failed to improve, albeit performance was not as poor as Melbourne’s.
The city recorded a vacancy rate of 3.3%, which is 0.1% higher than January. Its asking rents declined by 0.4%.
“The figures for Melbourne and Sydney would be disappointing for existing property investors,” said Managing Director of SQM Research, Louis Christopher.
“Normally, vacancy rates in these two cities fall over February, in part due to international students starting their semesters. But given the ongoing closure of the international border, the seasonal increase in rental demand has not occurred this year. This year will favour tenants in the inner cities but will also very much remain a landlord’s market in regional Australia.”
Louis Christopher, Managing Director of SQM Research
Meanwhile, the remaining capital cities recorded vacancy rates below 1.0%.
“Elsewhere, we are still recording strong interest from tenants in larger properties in outer suburban locations as well as wider regional Australia. Investment property owners in Darwin or Perth have also enjoyed a strong year of rental returns,” Mr Christopher explained.
Overall, this brings the national rental vacancy rate to a steady 2.0% compared to a year ago.