AFTER holding on for four consecutive months, the national vacancy rate has dropped to its lowest point on record, leaving tenants exposed to shrinking options and further rent hikes.
July saw the national vacancy rate fall below 1%, reaching a new low at 0.9%, placing increased pressure on renters as the market tips even further in favour of landlords, with vacant rental listings down 45.4% from this time last year, when the rate sat at 1.7%.
“This creates a difficult environment for prospective tenants and highlights the need to address the rental crisis in many areas. The return of overseas migrants and international students, higher household formation, and affordability issues with purchasing a property continue to pressure the rental market,” said Nicola Powell, chief of research and economics at Domain.
The combined capital city rate also dropped 0.1% over the month hitting 1% and falling more than a full percentage point from July 2021’s 2.1% rate.
“The rental market remains firmly in favour of landlords’ across every capital city, with a shortage in rental supply driving up asking rents and further escalating competition between tenants,” added Powell
While Brisbane, Hobart and Canberra held steady at 0.6%, 0.5% and 0.8% respectively, Darwin was the only city to see some improvement for the month up from 0.5% t 0.6%.
Though not recording a decline, Brisbane’s vacancy rate is still sitting at a record low and is down 49.4% annually from 1.2%, while movement in all other capital cities excluding Melbourne and Sydney has been limited.
Sydney on the other hand hit its own record low with a vacancy rate of 1.3%, down from 1.4% in the previous month and 2.4% 12-months back.
Melbourne also continued to tightened, reaching its lowest vacancy rate since March 2019 at 1.4% after seven consecutive months of declines, down from 1.5% in June and 3.5% in July 2021.
Powell remained optimistic that cooling purchasing conditions when combined with the introduction of first-home buyer incentives could see some tenants instead enter the buyer’s market, potentially relieving some of the country’s rental demand.
“While vacancy rates have fallen in July, we could see rental conditions stabilise in the coming months with the rise of investment activity helping to alleviate tightening conditions,” concluded Powell.