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Residential Vacancy Rates: The Downward Spiral Continues

Residential Vacancy Rates: The Downward Spiral Continues

You may be tired of hearing about it, but the latest data on residential vacancy rates shows that they are continuing to fall.

And why wouldn’t they, given that the nation’s gaggle of politicians collectively haven’t got a clue about how to deal with this situation.

The latest data from SQM Research shows that the national vacancy rate dropped from 1.2% in August to 1.1% in September.

Comparing the situation with a year ago, Sydney’s vacancy rate has dropped from 1.5% to 1.3% and Melbourne is down from 1.8% to 1.2%.

In the latest month, vacancies dropped to lower levels, or stayed the same, in six of the eight capital cities.

Vacancies have actually increased in a couple of cities in the past year, namely in Canberra and Hobart, but they still remain alarmingly low.

The highest vacancy rate among the capital cities is the 1.8% in Canberra, still well below the industry benchmark of 3% which is considered to denote a balanced market.

Now there is no prospect of the situation improving any time soon for a variety of strong reasons.

Firstly, there are no solutions on the table from the people who have caused this chronic shortage, the nation’s state and federal politicians.

Secondly, many of the people who provide over 90% of the homes people rent – mum and dad property investors – are exiting the market, because of the actions and policies of the afore-mentioned politicians.

Thirdly, we’re not building nearly enough new homes and the latest housing finance figures from the ABS show that the number of loans for the construction of new dwellings have fallen to the lowest level since 2008, the year of the GFC.

And fourthly, overseas migration into Australia is at record levels.

Add all that together and you have a recipe for vacancies to keep falling and rents to keep rising, notwithstanding the attempts by the Greens to make the shortage situation worse by bringing in a rental freeze, which would be throwing petrol on the blaze of a chronic shortage of rental properties.



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