Renters Face Uphill Battle in Landlords’ Market

The nation’s rental vacancy rate has shrunk back to record lows in 2023 while asking rent prices have skyrocketed, led by the tightest markets of Perth and Adelaide.

Sydney, Melbourne and Perth have all chalked up their lowest residential vacancy rates on record in January 2023 after a small seasonal reprieve in December. 

Perth and Adelaide have a 0.3 per cent vacancy rate, while Sydney and Melbourne are down at 1 per cent—the third month the two capital cities have been on par. 

Domain chief of research and economics Dr Nicola Powell said the rental crisis was “worsening” across much of Australia. 

“Low supply is driving a landlords’ market across all capital cities,” Powell said.

“The continued growth in asking rents, along with increasing demand, exacerbates a highly competitive environment for tenants.”

Rental vacancy rates—capital cities

_{^ Source: Domain Rental Vacancy Report January 2023}

Powell said the return of international and domestic travel, migration and international students had fed into the supply crunch. 

“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,” she said.

Nationally, vacant rental listings are 36.1 per cent lower annually and are at an all-time low for the month of January. 

They also remain down across most capital cities. 

Hobart was the only capital city to buck the trend, recording a flurry of listings, which drove up its rental vacancy rate last month. 

Meanwhile, the nation’s economic capital slipped back to its record low of 1 per cent with median house rents at record highs.

Domain data shows unit rents surged 4.5 per cent over the December quarter to a record high, which continues to outpace houses. 

Powell said this was driven by the decline in rental stock in Sydney, which was at a record low last month, and down 44 per cent over 12 months. 

Melbourne has recorded the steepest fall in rental listings of all the capital cities, down 61 per cent annual, hitting an all-time low last month. 

The city’s vacancy rate is down at 1 per cent now, which Powell said was impressive considering it peaked at 5.6 per cent in December 2020.

In welcome news for renters in Brisbane the vacancy rate may have declined this month but it is up on the median for last year. The Brisbane suburb of Mt Gravatt recorded the biggest increase in vacancy in the country, while Broadbeach, Ipswich and Caboolture all featured in the top 10 for increase in vacancy. 

Falling lending rates are expected to continue into 2023 with a dip in investor financing and an anticipated cash rate hike this month weighing into rental housing supply dynamics.