- Nationally, 76,000 rental properties were vacant over the month of December 2020
- This equated to a 2.2% vacancy rate, lower than 2.5% in December 2019
- Melbourne's vacancy rate was 4.7%, well above their 2.5% of the previous December
- Sydney was sitting at 3.6% in December 2020, the same rate as the year before
For those looking for rental properties across the country, there were 76,658 vacant, according to SQM Research for December 2020.
This was around 12,000 (or 14%) less than the same month a year ago, but a slight uptick (2.2%, from 2.1%) from November 2020.
Digging into the numbers, there are more available rentals in the Sydney and Melbourne markets, although, according to the report, their surpluses have been falling.
Most other capital cities saw their vacancy rates stay the same, or have modest declines.
The vacancy rate shows the amount of available properties for rent in an area, as compared to the total amount of properties, expressed a percentage.
A bit like unemployment figures, it’s not always clear what the ‘correct’ or ‘balanced’ vacancy rate is, but most commentators believe a rental vacancy rate of around 3% to be normal. Full employment is often defined as having unemployment around the same level, perhaps 4% or so.
There will always be people moving between jobs, as there will be people moving between properties, coming onto or leaving the market.
So a 2.2% rate across the country could point to a rising market, where there are less available rentals than normally required to satisfy demand.
Given that, we would then expect to see rental prices rise, which is what we are seeing. However, with the current government moratoriums in place in various jurisdictions placing restrictions on rent increases, rental prices have been held artificially low.
Once these restrictions go, giving everything else we are seeing, we might expect pent up price increases to arrive.
Indeed, SQM Research showed there was a fall in capital city average asking rents in December 2020: -0.2% for houses and -0.5% for units.
As happens with averages, they may not be indicative of everywhere around the country. The majority of capital cities saw rent prices rise. Darwin saw both house and unit rentals rise 4% or more in SQM’s ‘rolling month’ calculation, and 27% up over the year.
Meanwhile, Brisbane saw rent house prices rise 1.6% for the month of December, as did Perth. Hobart saw a 3.1% rise in the same, Canberra 1.4% rise, with Adelaide holding steady.
However, both Sydney and Melbourne dragged the national average down with declines of around 1%, and 5% to 10% declines for the 2020 year.
“It’s clear Sydney and Melbourne apartment investors were the losers of 2020 with rents and prices falling,” said Louis Christopher, Managing Director of SQM Research.
“However, if you owned an investment property in Darwin or Perth, or indeed regional Australia, you have had one of the best years ever.
“The move towards regional living was the primary reason why investors outside our two largest capital cities did so well.
“Will this trend continue into 2021? The truth is we are starting to see at least a part reversal. CBD and inner suburban vacancy rates have been falling again. And inner urban agents have been telling me demand has clearly picked up for such properties.
“But I don’t think it is going to be a complete reversal. Demand for inner city property will remain affected by the closure of the international border as well as ongoing caution on future city lockdowns. This will mean 2021 will remain largely a tenant’s market.”
SQM interactive chart and data, used with permission.