By Terry Ryder, 19th September 2012
Vacancies across Australia’s eight capital cities have dropped for three consecutive months, according to figures released this week by SQM Research.
The data indicates that residential vacancies fell in August from 1.9% to 1.8%. Nationally, there were 50,774 vacancies, a decrease of 2,127 vacancies month-on-month and the third monthly decline.
With Canberra and Darwin the only capital cities to record monthly increases, most capital cities either stagnated during August or experienced modest declines.
With every capital city recording vacancy rates under 3% (a figure regarded as equilibrium), SQM Research considers rental market to be predominantly in favour of landlords.
Darwin, although loosening slightly month-on-month, is still recording very low vacancies. “With a current vacancy rate of 0.5% (total of 114 vacancies) it is fair to assume that the city is continuing to show all the symptoms of a severe rental crisis,” says SQM Research managing director Louis Christopher. “However, it should be noted that vacancies are seasonally at a low point.”
This correlates with other data, such as the Rental Report from Australian Property Monitors, which finds Darwin is experiencing strong growth in rents for both houses and units, well ahead of other capital cities.
As Darwin’s evolves towards becoming a gas hub of international significance, led by progress on the $34 billion Ichthys LNG project, demand for residential accommodation is rising. The previous over-supply of apartments appears to have been soaked up by the market. (Darwin features in the new edition of our National Top 10 Boom Town Hotspots report http://www.hotspotting.com.au/report/119-national-top-10-boom-town-hotspots)
Christopher says the consistent rise in vacancies for Canberra is most likely the result of Federal Budget cuts and downsizing of the public service.
He notes observations elsewhere that rental listings across the capital cities may have increased. “However, from our calculations, the increased listings are being absorbed rather quickly and largely failing to make stay on the market beyond three weeks,” he says.
“One other observation is that vacancies do appear to be rising in a number of prestige property locations and we think that this is because of the cancellation of certain away-from-home accommodation allowances, which were used primarily by executives in prestige real estate.”
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more, compared to the total number of established rental properties. SQM considers this to be a superior methodology compared to using a potentially incomplete sample of agency surveys or merely relying on raw online listings advertised.
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