Vacancies Fall As Uni Year Starts

Posted on 27/02/2018  
Vacancies Fall As Uni Year Starts

Vacancies have dropped in capital city Australia early in 2018 after rising late last year, as the usual seasonal factors came into play.

Data from SQM Research indicates that the national vacancy rate (the average for the eight capital cities) fell to 2.3% in January, down from 2.5% in December, as renters secured homes for the start of the new year.

“The vacancy numbers highlight tighter rental markets in most capital cities, which was to be expected in the first month of the year as renters found new rental homes,” says SQM’s Louis Christopher.

“We’ve seen falls across all cities, as students prepared for their first semester of study and lease new homes – and workers also secure new tenancies, especially in Canberra which has a transient workforce and Sydney also.”

Christopher notes particularly tight rental conditions in Hobart, which is putting strong upward pressure on rents.

The current vacancy rate in Hobart is 0.4%, easily the lowest in the nation. It has been consistently around this level for the past year or so.

Canberra (0.9%) also has a very tight rental market - its vacancy rate has hovered around 1% for the past 12 months.

Melbourne’s overall vacancy rate has dropped from 1.9% to 1.8%, while Adelaide has contracted from 1.9% to 1.5%.

Perth has shown steady improvement, down from 5.1% in early 2017 to 4.4%, as that market steadily recovers from four years of declining market conditions. But it needs to continue falling before the WA capital can expect rents to start rising again.

Darwin is improving also, with its overall vacancy rate down from 3.7% to 3.1%.

Sydney and Brisbane are the only cities not to show improvement. Sydney’s overall vacancy rate, according to the SQM Research figures, has risen from 1.9% to 2.3%, while Brisbane has remained at 3.6%.

As is always the case, the generalised vacancy figures disguise different situations in individual markets. Some parts of the Sydney market have much higher vacancies, notably the Sydney Olympic Park precinct, while most of Brisbane’s inner-city suburbs have vacancy rates of 6% or higher.

There continues to be close correlation between vacancies and rental price movements. Hobart and Canberra, the cities with vacancy rates below 1%, are the only markets to record significant growth in rents.

According to SQM’s Asking Rents Index, house rents in Hobart are up 15% in annual terms, while Canberra has risen 7%.

In Sydney, there has been little change in overall rental levels for houses.

In the cities where vacancies are high, rents have been falling. Perth’s index for house rents is down 2.2% in annual terms, while Darwin has dropped 2.3% and Brisbane 0.4%.

 

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