dog vacancy
The rental vacancy rate has declined significantly in Wanneroo. Image – SQM and Canva.
  • Four city locations hit a vacancy rate of just 0.1% in May
  • All ten areas have median weekly rents between $340 to $450
  • Proportion of investor finance still below decade average

The top ten most undersupplied house rental markets in the cities have been revealed by research undertaken by Your Property Your Wealth and Suburb Trends.

Six capital cities have at least one sub-region in the top ten.

There were four city locations where the residential vacancy rates fell as low as 0.1% in May, while the remaining six recorded a 0.2% vacancy rate.

A ‘balanced’ rental market, where there are enough vacant rentals to satisfy demand, is generally regarded as around 3%, so these markets are extremely tight.

Daniel Walsh, Your Property Your Wealth director and buyer’s agent, said these markets, for all practical purposes, had no rental supply, even though they had affordable rental prices.

“The research found that the 10 city suburbs with the lowest vacancy rates for rental houses all had median weekly rents of $340 to $450 in May,” Mr Walsh said.

“This shows the dire situation for many tenants who are struggling to secure an affordable rental property in our capital cities because the supply has mostly dried up.”

Daniel Walsh, Your Property Your Wealth

Top 10 most undersupplied rental house markets

Sub Region (SA3) Capital LGA Max Vacancy Rate (1m) Lease Median (12m)
Wanneroo Greater Perth Wanneroo 0.1% $380
Onkaparinga Greater Adelaide Onkaparinga 0.1% $350
Loganlea – Carbrook Greater Brisbane Logan 0.1% $410
Hobart – North West Greater Hobart Glenorchy 0.1% $430
Redcliffe Greater Brisbane Moreton Bay 0.2% $400
Salisbury Greater Adelaide Salisbury 0.2% $340
Stirling Greater Perth Stirling 0.2% $380
Frankston Greater Melbourne Frankston 0.2% $340
Sandgate Greater Brisbane Brisbane 0.2% $435
Narangba – Burpengary Greater Brisbane Moreton Bay 0.2% $340
Richmond – Windsor Greater Sydney Hawkesbury 0.2% $450

Source: Suburb Trends, Your Property Your Wealth

Greater Brisbane had four of the most undersupplied markets while Perth and Adelaide had two each.

Mr Walsh warned that Brisbane’s rental undersupply situation is likely to worsen given significant interstate migration. In the December quarter alone, Brisbane recorded a net gain of 5000 – the largest gain since 2002.

The most undersupplied areas with just a 0.1% vacancy rate included Wanneroo, a northern suburb of Perth.

Wanneroo – postcode 6065

[Select part of the chart to zoom in on various years, and ‘reset zoom’ button to return]

The SQM Research data above shows a higher vacancy rate, however, it should be noted this includes houses and other dwellings such as units, and not just to the suburb of Wanneroo itself. Nonetheless, the graph shows a significant decline in the rental vacancy rate for the Wanneroo postcode over the past few years.

While investor activity is on the rise, it is still below historical averages, which Mr Walsh argues means the rental undersupply is unlikely to change in the short term.

The proportion of investor finance secured is also well below the decade average of 35.8%, recording 25.9% in April.

“Rental markets were heading into undersupply territory long before the pandemic,” Mr Walsh said.

“This was because of the overly restrictive lending criteria that was implemented more than four years ago, which greatly reduced the normal flow of investment activity in the market.

“Now, the fallout of that policy has come home to roost, with hundreds of city suburbs across the country having very few rental properties available for prospective tenants.”

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