Vacancy rates at their lowest since 2017

Australia’s rental market remained a landlord’s market in May as vacancy rates remained at their lowest level since 2017.

Figures from Domain showed that the national rental vacancy rate was still at 1% for the third consecutive month in May, reflecting what seemed like a broader strengthening of the rental market that started since the beginning of the year.

Most capital cities maintained their vacancy rates, but Melbourne, Brisbane, and Darwin witnessed a slight change over the month.

On an annual basis, Darwin registered a slight rise in vacancy, while the rest of the capital cities maintained or even saw lower rates.

The Domain report said rising interest rates and the slowdown in median home price growth are the biggest factors driving the rental crisis, with landlords trying to boost their returns by increasing rents.

“The continued recovery and resurgence of the rental market see demand exceeding supply two years from the onset of the pandemic, resulting in the overall decline seen in 2022 and could see lower vacancy rates remain in the coming months,” the report said.

“Sydney and Melbourne are driving this recovery as the two cities that experienced the largest rises in their vacancy rates over the last two years.”

Capital cities — landlord’s market?

All capital cities remained in favour of landlords in May, supported by the shortage in rental supply that is driving up prices and increasing tenant competition.

Melbourne’s vacancy rate has been falling since December last year while Sydney remained at its tightest state since 2017.

Sydney, as the report said, seemed to be showing a more competitive market now compared to pre-COVID levels, on the back of the fifth consecutive month of fall in rental listings.

Brisbane’s vacancy level also hit a record low during the month, while Canberra, Adelaide, Perth, and Hobart held steady.

Of all capital cities, Adelaide remained the most competitive rental market, with its vacancy rate sitting at 0.3%.

The report said increases in rental prices are to be expected given the continued tightening of conditions in these cities.

“The rise in investor activity, the arrival of overseas migrants, and the return of international students will see rental demand remain elevated, worsening conditions for tenants,” the report said.

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Photo by @austindistel on Unsplash