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Vacancies Shrink as Nation’s Rents Rise

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Rental markets have continued to tighten with vacancy rates in many parts of the country shrinking as rents increase.

Given the limited supply of rental properties—61,300 vacancies nationally—rents have been rising week-on-week.

Nationally, the residential rental vacancy rate held at 1.7 per cent for July while rents hit $508 a week, up 1.3 per cent over the month and 13.7 per cent over the past 12 months, according the latest report from SQM Research.

Asking rents rose 1.3 per cent for houses to $526 per week while units rose by 0.5 per cent to $420 a week.

Capital city rents also rose by 0.5 per cent for houses over the month and are up 8 per cent over the past 12 months.

Sydney and Melbourne continued to feel the impact of Covid-19-induced restrictions and international border closures.

Melbourne’s vacancy rate rose to 3.6 per cent from 3.5 per cent in June, while Sydney’s vacancy rates tightened to 2.7 per cent from 2.8 per cent.

In Adelaide, Darwin and Hobart the vacancy rate remained below 1 per cent, while Perth and Brisbane and Canberra rate remained unchanged.

A vacancy rate of between 2 and 3 per cent is generally considered to be “healthy” while above 4 per cent or below 1 per cent poses risks.

Vacancy rates: July 2021

CityJun 2021 vacancy rateJuly 2021 vacancy rateJul 2021 vacancies
Sydney2.8%2.7%20,717
Melbourne3.5%3.6%22,890
Brisbane1.3%1.3%4651
Perth0.9%0.9%1908
Adelaide0.6%0.7%1440
Canberra0.7%0.7%496
Darwin0.4%0.6%211
Hobart0.4%0.5%172
National1.7%1.7%61,313

^Source: SQM Research

Rents for houses in Brisbane are now up by 11.2 per cent, 12.9 per cent in Perth and 25.3 per in Darwin across the year.

Comparatively, rents for houses have increased by 7.2 per cent in Sydney and 2.8 per cent in Melbourne.

The unit rental market, however, remains weak. In Sydney rents have lifted by just 0.9 per cent this year and Melbourne has gone backwards, experiencing a decline of 4.9 per cent.

“Given the ongoing international border closures and still relatively high completions, the national rental market should be at least more balanced,” SQM managing director Louis Christopher said.

“That may well still happen if lockdowns persist through to summer as it is likely many people living in Sydney and Melbourne may attempt to move elsewhere.

“It is also possible that long-term leasing is becoming very challenging for landlords due to rental moratoriums.

“We believe instead that landlords may increasingly be using short -erm accommodation websites such as Airbnb and Stayz whereby they have a greater say on who occupies their property and the length of time they stay.”

Christopher said the new lockdowns had triggered another wave of interest in regional living as many fled strict Covid measures in the cities.

According to the Australian Bureau of Statistics, there has been a substantial increase in movers from Sydney and Melbourne amid the pandemic.

More than 60,000 residents have departed the two biggest cities to other parts of the country over the year to March 2021.

This was particularly significant in Melbourne, which has lost 32,000 residents during the period.

Corelogic research director Tim Lawless said gross rental yields outside of Sydney and Melbourne are likely to be providing opportunities for positive cash flow investment opportunities.

“The good news for landlords is that rental markets in these areas are stabilising.

“It follows a substantial reduction in rents due to high vacancy rates attributable to stalled overseas migration and a preference shift away from high density living during the pandemic.”

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Article originally posted at: https://www.theurbandeveloper.com/articles/sqm-research-rental-vacancy-july-2021