Vacancy rates rising, rental growth slowing

A leading property data analyst believes that while property investors continue to hold the balance of power in the rental market, the rental crisis among tenants is now starting to ease.

SQM Research Managing Director Louis Christopher said new data showed vacancy rates (which measure the share of untenanted rental properties) had increased in several capital cities and, as a result, the pace of rent increases had significantly slowed.

Mr Christopher was quick to note that “the rental crisis is not yet over and, given our ongoing strong population growth rates, it is very unlikely we will get to an oversupply of rental properties anytime soon”. However, he added that a mere easing in conditions “can at least translate to a steadying of market rents after what has been an extended period of very rapid market rent growth”.

Here is the latest SQM data for the eight capital cities:

Sydney

• The vacancy rate was 1.7% in June, compared to 1.5% in May and 1.8% in June 2022.
• Asking rents fell 0.1% over the month to 4 July and rose 20.6% over the year.

Melbourne

• The vacancy rate was 1.3%, compared to 1.2% the month before and 2.1% the year before.
• Asking rents rose 0.2% over the month and 19.9% over the year.

Brisbane

• Brisbane's vacancy rate was 1.0% in both June and May, and 0.7% in June 2022.
• Rents increased 1.2% in monthly terms and 14.3% in annual terms.

Perth

• The vacancy rate was 0.6% in June, 0.6% in May and 0.7% in June 2022.
• Asking rents climbed 0.4% month-on-month and 17.1% year-on-year.

Adelaide

• The vacancy rate has barely moved – 0.6% in June, 0.6% the month before and 0.7% the year before.
• But rents increased 0.9% over the month to 4 July and 11.4% over the year.

Hobart

• Hobart's vacancy rate has sharply increased over the year – it was 1.9% in June, 1.6% in May and 0.7% in June 2022.
• As a result, asking rents fell 2.1% over the month and 1.2% over the year.

Canberra

• A similar story has played out in Canberra – the vacancy rate was 2.1% in June, 2.0% in May and 1.0% in June 2022.
• That saw rents decrease in both monthly (0.3%) and annual (0.6%) terms.

Darwin

• The vacancy rate was 0.9% in June, 0.9% in May and 0.7% in June 2022.
• Rents rose 2.3% month-on-month and 4.9% year-on-year.

While vacancy rates and rental growth are easing, they’re still strongly favouring property investors.

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