Little relief for renters as vacancies edge higher

New figures from REA Group show the number of vacant rental properties in Australia has edged up to its highest level since July last year.

However, the latest PropTrack Market Insight Report provides little comfort for people looking to rent a home or for tenants looking to move - with vacancy rates still extremely low by historical standards, particularly in regional areas of Australia and in Perth, Hobart, Brisbane and Adelaide.

The details

PropTrack says the national rental vacancy rate increased by 0.19% in October 2024 to 1.36%.

This is the highest vacancy rate in more than a year.

PropTrack Senior Economist Anne Flaherty says the increase has largely been driven by more properties available to rent in Australia’s capital cities coming onto the market.

“While rental supply improved across both capital city and regional markets in October,

there has been greater relief for renters in cities,” she says.

“Over the past year, vacancy rates in capital cities rose by 0.33%, while the combined regional areas remain 0.13% lower than a year ago.”

Sydney saw a reasonably large increase in rental vacancies in October, rising 0.31% to 1.57%.

Only Darwin saw a bigger jump, rising 0.41% to 1.39%.

Melbourne (1.64%) and Brisbane (1.07%) saw smaller rises of 0.18% and 0.19%, respectively.

PropTrack says rental vacancies remain tight in Adelaide, at 1.13% (up just 0.07% in October); however, they’ve risen 0.22% since October 2023.

Anne Flaherty says strong investor activity in Perth has contributed to a rise in the number of rental properties coming onto the market.

Even so, vacancy remains incredibly low at just 0.97%.

However, Hobart is the city with the dubious distinction of having the lowest vacancy rate in the country, with just 0.82% of rental properties sitting vacant in October.

Regional areas

Finding a rental property - let alone an affordable one - remains a particularly tough challenge for renters in regional Australia, where vacancy rates have deteriorated over the past year.

There are also nearly less than half the properties available for rental in less than there were before the onset of COVID-19.

“Compared to March 2020, there were 45% fewer properties available for rent in Australia’s regional areas,” PropTrack’s Anne Flaherty says.

PropTrack’s “Rest of Qld” market measure, which takes in the Queensland cities of the Gold Coast, Townsville, Cairns, Rockhampton and Bundaberg has the lowest rental vacancy rate in Regional Australia at a tiny 0.96%.

Vacancy measures for Regional New South Wales, Regional Victoria, Regional WA and Regional Tasmania are only marginally higher in the 1.20-1.29% range.

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Perspective

While PropTrack’s October 2024 figures show some easing in rental vacancies, it’s worth putting these figures in perspective.

“Despite the improvement, rental supply remains well below pre-pandemic levels, with

35% fewer properties available for rent,” says Anne Flaherty.

The bottom line is the rental market is still heavily tipped in favour of landlords and property investors, not tenants.

At 1.36%, Australia’s national vacancy rate is less than half of what is considered a healthy, “balanced” market.

Most analysts regard a 3% vacancy rate as a “balanced market,” where tenants have a decent choice of rental properties and can also haggle on price or inclusions, while landlords can still command a fair rental return.

A recent rental report from rival property analytics firm Domain was blunt, stating that “the misalignment between supply and demand is still on full display across Australia’s rental market, with each capital city operating with a sub-2% vacancy rate, so tenants remain in a landlords’ market.” 

Given the current housing shortage and continuing strong overseas migration, it’s a situation which seems unlikely to change significantly in the foreseeable future.