- Property investors granted considerable market power in suburbs with extremely low vacancies, allowing rents to be pushed up
- NSW, QLD and VIC dominate top 20 most tightly-held markets, with NSW's Casuarina ranked first for one vacancy
- Renters urged to consider buying instead, although disadvantage may prevent homeownership in some areas says Scott Spencer
Research has revealed the names of Australia 20 most tightly-held rental suburbs, where securing a rental property is close to impossible.
The research, commissioned by mortgage lender Well Home Loans, determined the most difficult to enter suburbs that have as little as one, two or three vacant rental properties.
For a rental property to qualify as vacant, it must have been on the market available to rent for 21 days or over.
The suburb also had to satisfy several requirements including no more than three vacant rentals, a legitimate market with over 500 rental properties, average time on the market less than 20 days, and a tight rental market in the neighbouring suburbs.
Investors granted significant market power
Of all Australian suburbs that met these extensive requirements, a narrow list was deduced depicting the areas where securing a rental property was most competitive.
These suburbs were then ranked in terms of the highest change in rental rates over the past year, to establish the top 20.
With the exclusion of the Northern Territory, all states and territories were represented in the top 20 with a surprising focus on regional suburbs over capital cities.
Scott Spencer, CEO of Well Home Loans, indicated that the top 20 list showed two stories playing out simultaneously with investors coming out on top while tenants struggle to enter these exclusive suburbs.
“If you’re an investor in a suburb that contains only three vacant rental properties, tenants have to compete hard for your property, which gives you the chance to push up rents.”
Scott Spencer, Well Home Loans CEO
“Conversely, if you’re a tenant, life is really tough, because it’s difficult to find accommodation and you know rents are climbing fast,” he said.
Mr Spencer explained that all suburbs included are in areas with astonishingly low vacancy rates, meaning tenants are left with little options even if willing to move a few suburbs over.
Top 20 tightest suburbs ranked
Topping the chart was the NSW suburb of Casuarina, located in the north-eastern Tweed Shire. The suburb has an incredible tight rental market, with only one property identified as vacant out of 560.
Rental houses and units are in high demand, spending on average a meager 19 days on the market while a typical rent for houses has climbed $205 in 12 months.
Following shortly behind Casuarina, Henley Beach South ranks second as the only South Australian suburb to make the top 20 list. Only 1 rental property is currently vacant of a total of 609 rental properties, pushing house rents up by $175 in the past 12 months.
Western Australia followed suit with only North Beach reaching top 20 status, while NSW, Queensland and Victoria dominated the charts.
|Rank||State||Suburb||No. of vacant rental properties (houses & units)||Increase in weekly rents over previous 12 months (houses only)|
|2||SA||Henley Beach South||1||$175|
|16||NSW||Tweed Heads South||3||$110|
|18||NSW||Tweed Heads West||3||$105|
Disadvantage pushing homeownership out of reach
Mr Spencer advised tenants looking within these areas to consider purchasing instead, particularly when rents surpass mortgage repayments.
However, he did acknowledge that a number of these suburbs where rents are rising also have high levels of disadvantage, making homeownership difficult for residents to reach.
“Tweed Heads South and Tweed Heads West, for example, are located in an area in the bottom decile, which means their area is more disadvantaged than 90% of areas within New South Wales. That makes it hard for tenants to afford rising rents and to save a deposit,” he said.
In other areas, however, homeownership is not off the cards for residents and may be a viable alternative to battling low vacancies and increasing rents.
“Conversely, Casuarina is located in an area in the top decile, which means their area is less disadvantaged than 90% of areas within New South Wales. So they would find it easier to cope with the big jump in local rents and to get onto the property ladder,” Mr Spencer concluded.