Rental crisis deepens as rents surge, vacancies shrink further

Renters chasing affordability would be better off chasing units or properties in regional markets as rents continue to surge on the back of low vacancy rates.

Data from Domain and SQM Research showed how rents surged over the past month as vacancy rates continue to trend down.

According to SQM Research, the overall vacancy rate was at 1% in March, the lowest national vacancy reading since 2006.

All cities reported a significant decline in vacancy rates, with Adelaide and Hobart reaching the lowest rate at 0.3%.

The two biggest markets — Sydney and Melbourne — now have sub-2% vacancy rates at 1.6% and 1.9%, respectively.

SQM Research managing director Louis Christopher said the further declines in vacancy rates over the month indicate the deepening rental crisis.

“As a result, market rents have exploded — some of our capital cities and regions are recording asking rental increases more than 15% over the past 12 months,” he said.

“We are still not at the worst point of the crisis — we were thinking at least regional Australia may have started to have some relief as people return back to the cities.”

Rents hit record highs

Figures from Domain showed that weekly rents continued to climb for both houses and units across capital cities over the March 2022 quarter.

While house rents have hit a new record high at a median of $508, unit rents are growing at a faster rate over the March quarter, up 2.8% to $448.

Canberra reported the highest weekly rents for both property segments at $700 for houses and $540 for units.

Melbourne remains the most affordable capital city to rent houses, with a median rent of $450. For units, Adelaide had the most affordable rent at $380.

Domain chief of economics and research Dr Nicola Powell said renters continue to find themselves in a heated market with shrinking supply.

“For renters facing this more cluttered market, considering whether unit rental options can provide a more affordable alternative to houses, or seeking out cities or suburbs where rental asking prices are showing to be more affordable or have higher vacancy rates, could help in landing a rental property,” she said.

Despite the rise in rents, only three cities reported a quarterly increase in rental yields: Adelaide, Perth, and Hobart.

On the other hand, all cities, save for Hobart, posted a quarterly gain in rental yield for units.

“High rental yields are likely to attract investors to cities such as Perth, Darwin, and Canberra, with investors able to tap into competitive rental trends and use them to their advantage,” Dr Powell said.

Photo by @karolina-grabowska on Pexels.