Sydney verging on rental oversupply

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RESIDENTIAL vacancies across Sydney remained at their highest level in 13 years in August as it teeters on the brink of oversupply, while Hobart is still home to the tightest market in the country.

The latest data from SQM Research showed the national vacancy rate firmed slightly to 2.1% over the month, at 70,447 properties.

Louis Christopher, managing director of SQM Research, said asking rents had eased in Sydney given the greater supply of rental accommodation, which is now verging on oversupply.

“The trend for the vacancy rate is definitely up and, as a result, Sydney is increasingly becoming a tenant’s market.”

Its vacancy rate of 2.8% was unchanged over the month and is well up on the 1.9% one year ago, and its at its highest level since SQM Research began recording the data in 2005.

Numbers from REINSW’s latest Vacancy Rate Survey for August had Sydney’s metropolitan vacancy rate up from 2.8% to 3.0%, with the middle and outer Sydney markets increasing to 3.1% each, and inner Sydney up to 2.9%.

“We have seen a steady and relatively consistent rise in vacancy rates across Sydney as a string of developments reach completion creating an oversupply in the marketplace,” REINSW president, Leanne Pilkington said.

“As a result rents are falling and properties are staying longer on the market than usual.”

Asking rents for Sydney houses dropped by 3.4% over the year to September 12, according to SQM Research, which expects to see further falls.

“In contrast, the tight rental markets in Hobart and Canberra are continuing to push asking rents higher,” Christopher said.

Vacancies in Hobart came in from 0.7% to 0.5%, out slightly from the 0.3% one year ago, while asking rents grew by 2.9% for houses and 3.8% for houses and units respectively over the month, for annual increases of 7.0% and 19.9%.

Canberra led the country for house rental growth, at 12.3% year-on-year, and by 3.3% for units. Vacancies inches downwards from 0.7% in August, and are below 1.0% this time last year.

On the west coast, Perth’s vacancy rate dropped from 4.0% to 3.7%, although rents were also down. The firming from 4.9% one year ago as oversupply has eased came with a 2.2% increase in house rents and a 0.5% slip for units.

Brisbane tightened slightly to 2.8%, and 3.4% one year ago, while rents have crept up by 1.0% for houses and 1.1% for units.

Vacancies in Adelaide came in further to 1.2%, down from 1.5% 12 months earlier, and rents have increased by 2.3% and 2.4% for houses and units.

Darwin’s rose to from 3.4% to 3.5%. House rents have dropped by 5.7% annually, and units are up by 1.1%.

Rents nationally grew 1.4% for houses and units monthly, by 3.3% and 3.4% over the year.

Australian Property Journal

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