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Low Vacancies Bode Well For Price Uplift

Positive News for Rental MarketsTight vacancies and rising rentals in most Australian cities suggest there will be upward pressure on prices in 2020.

The national average vacancy rate, according to SQM Research, is 2.2% – compared with 2.3% a year ago. Six of the eight capital cities have vacancy rates of 2.5% and under, while the other two are slightly above 3%.

With construction levels for new dwellings falling and listings of homes for sales continuing at low levels, many markets have a supply shortage.

This helps to explain why we have begun 2020 with prices rising in most cities and in most state regional markets.

The SQM data shows that Hobart remains the tightest rental market, with a vacancy rate of 0.5%. Both Adelaide and Canberra have vacancy rates around 1%.

Those three cities all recorded solid growth in rentals, for both house and apartments, over the past year.

Brisbane and Perth both had vacancy rates above 3% a year ago but both are now sitting at 2.5% – and rents are rising in those cities as well.

Melbourne’s vacancy rate has risen slightly, but the market overall remains tight at 2.2%.

The only cities where rents are not rising are Sydney and Darwin, which both have vacancy rates above 3%. Sydney’s average vacancy rate has risen from 3.2% a year ago to 3.4%, but there remain pockets throughout the city where vacancies are much lower.

Many analysts have forecast supply to tighten further as 2020 progresses, because construction levels have dropped from the recent higher levels and listings of existing homes for sale remain lower than demand in many cities.

Many regional markets also have very low vacancies. In many cases – including Ballarat in Victoria, Mackay in Queensland and Dubbo in New South Wales – vacancy rates are below 1.5%, which is helping to support attractive rental yields in these markets.


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