Canberra, Hobart Lead City Rental Markets

Posted on 16/11/2017  
Canberra, Hobart Lead City Rental Markets

New data released by SQM Research has highlighted the linkages between vacancy rates and rental growth in our major cities.

The cities which consistently have the lowest vacancy rates, Canberra and Hobart, are the only cities to deliver strong rental growth, while the capital with the highest vacancies, Perth, has the worst outcome with rentals.

SQM managing director Louis Christopher says the average vacancy rate nationwide was 2.1% in October 2017, with the number of vacancies Australia-wide falling to 67,781 – a slight drop on the month of September.

Hobart's vacancy rate fell to a record low of 0.3%. Christopher says it’s now the lowest on record since SQM started recording data in 2005.  In Canberra, the vacancy rate dropped to 0.8% in October from 1.0% in September.

SQM’s Weekly Rents Index for Canberra is up 13% in annual terms for houses and 5% for apartments. In Hobart, house rents are up 5.4% and apartments rents more than 12%.

“In Hobart, the shortage of rental accommodation is the most severe, with just 75 properties available for rent in October, prompting a record low vacancy rate of 0.3% and higher asking rents, especially for units which were up 7.9% over the month to 12 November,” Christopher says.

None of the other cities have recorded rental growth as high as 5%, either for houses or for apartments. Perth, Darwin and Brisbane – the cities with the highest vacancy rates in recent times – all have negative figures on rentals.

The vacancy dropped in Perth to 4.1% from 4.5% in October, which reflects the general improvement in this market, but it is still the highest of any capital city. In annual terms, the Rents Index for Perth is down 3% for houses and 4% for apartments.

Darwin’s vacancy rate fell from 2.7% to 2.5% over the month, reflecting ongoing improvement in this market, but the recent history of higher vacancies in the Northern Territory capital is reflected in the rental data – down 2% for houses and 8% for apartments (evidence that vacancies are considerably in the inner-city areas, compared to the overall vacancy rate for the Darwin metropolitan area).

This is also a factor in the Brisbane market. The overall vacancy rate for Brisbane improved slightly to 3% in October, but this disguises much higher vacancies in the inner-city suburbs (most of which are 5% or 6%, according to SQM figures) and this is reflected in the annual decrease in the Rents Index for Brisbane apartments.

In the bigger cities, vacancies fell in Sydney to 12,435 in October, down from 13,114 in September, giving a vacancy rate of 1.9%, down from 2.1% the previous month.

In Melbourne, the vacancy rate fell to 1.8% with 9,390 rental properties available. But, as in Brisbane and Darwin, this disguises rising vacancies in the inner-city apartment market, including the CBD, Southbank and Docklands.

Christopher says that, while rental markets tightened in many capital cities in October, he expects vacancies to rise in November and December due to seasonality factors - such as students finishing up their semester and heading home. 

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