New data has revealed there are only 31,000 residential rental properties available across the entire country, with rates plummeting back towards record lows and expected to stay there over February and March – if not drop even further.
The return of international students is most likely to blame for falls in Sydney, Melbourne and Brisbane, but vacancies in regional areas have also continued to fall.
The data released by SQM Research has revealed at the same time, capital city asking rents have continued to rise, with a 24.7 per cent increase over the past 12 months, and a 17.4 per cent rise in regional areas.
SQM Research managing director Louis Christopher said the national vacancy rates decreased in January back to 1.0 per cent after the seasonal rise recorded over December 2022.
“We are expecting a further tightening in rental vacancy rates over the month of February based on evidence that weekly listings have fallen again thus far in the current month,” Mr Christopher said.
“We have previously warned that the months of February and March will be the most difficult time for tenants in the national rental market in many years.
“Thereafter we are hoping for some relief given the expected increases in dwelling completions and an overall reduction in housing formation.”
Rental vacancies fall nation wide
The total number of rental vacancies Australia-wide now stands at 31,592 residential properties, having decreased from 39,568 recorded across the county in December.
Vacancy rates in Sydney, Melbourne, Perth, Brisbane and Canberra have again fallen to their previous record lows or just above their record low.
The data found only Hobart recorded a rise in its vacancy rate, from 0.6 per cent to 0.7 per cent.
Vacancy rates in the Sydney CBD, Melbourne CBD and Brisbane CBD decreased to 3.1 per cent, 2.7 per cent and 1.4 per cent over January, most likely reflecting the increase in demand from international students.
Most regional rental vacancy rates also fell, including the Blue Mountains, Mornington Peninsula and Toowoomba, which all recorded decreases in January after evidence of an easing of conditions in the second half of 2022.
However, rental vacancy rates on Queensland’s Gold Coast continued to rise.
Rental prices continue to rise
It comes as capital city asking rents rose by another 2.4 per cent in the past 30 days with the 12-month rise standing at 24.7 per cent, according to the data.
National rents across all regions also increased by 17.4 per cent during the same 12-month period.
But the data found Canberra and Hobart managed to buck the trend for the month with both cities recording falls in their respective asking rents of 1.3 per cent and 2.9 per cent respectively.
Melbourne recorded the largest monthly rise of 2.7 per cent.
The national median weekly asking rent for a dwelling is recorded at $562 a week.
Sydney recorded the highest weekly rent for a house at $913 a week.
But those looking of a unit in Adelaide have access to the best rental affordability of all capital cities with a median weekly asking rent at $401.
Mr Christopher said the surge in overseas longer term and permanent arrivals after a lengthy break due to border closures has meant the rental market has become tighter.
He said those pressures, coupled with the new residential property supply, will continue to create extremely tight rental conditions for the immediate future.
“The ongoing surge in rents is pushing up rental yields, especially with falling prices,” Mr Christopher said.
“I believe ‘would-be’ investors will be attracted to higher rental yields in later 2023, provided the cash rate peaks at below 4 per cent.”
The Reserve Bank of Australia lifted the cash rate for the ninth consecutive time on February 7, taking the official cash rate to 3.35 per cent.
Mr Christopher warned if the cash rate continued to increase over the coming months, renters will be feeling the pressure more than ever.
“If the cash rate rises above 4 per cent, it is likely home buyers, including investors, will largely stay away from the housing market for another year, and so investment dwelling approvals will remain in the doldrums, setting us up for another super tight rental market in 2024 and 2025,” he said.
Article source: www.news.com.au