The national vacancy rate edged up to 1.7% in December from 1.5% the previous month, marking the first increase since December 2020, according to a report by Domain.
Despite the monthly increase, the figures remain low compared to previous years, and 0.7 percentage points lower than the same period last year.
Domain pointed out that a high number of listings in all capitals except Hobart has caused rental markets to ease and vacancy rates to rise, challenging the status of national capitals as owner’s market.
However, the report notes that the rental market is expected to see an increase in supply in December, as the end of the year marks the period of rental change, with the end of leases and an increase in the number of tenants. options overall.
Let’s take a closer look at the rental markets of the capital cities, Sydney, Melbourne, Brisbane, , Canberra and Darwin all saw rising vacancy rates over the period. Meanwhile, Adelaide and Hobart have seen vacancy rates hold at multi-year lows.
Sydney had its second month of rising vacancy, up 2.6% from November’s 2.3%. This is the NSW capital’s highest vacancy rate since May 2021, but is at the same level as March 2020, just before the COVID pandemic hit the rental market of the city and leaves landlords scrambling to find tenants.
On the supply side, data showed there were 15,000 estimated vacant rental listings in the port city at the end of December, indicating a 13.8% increase in the month.
In Melbourne, the vacancy rate rose 0.2 percentage points to 3.2% during the month, ending a four-month streak of falling vacancy rates in the Victorian capital.
Year-on-year, Melbourne’s vacancy rates are significantly lower, down 2% from highs seen in December 2020 following the extended lockdown.
However, Domain pointed out that city rates remain high and still offer tenants the most options, with vacancy rates about twice as high as before COVID-19.
There were around more than 16,000 vacancies in Melbourne at the end of December, indicating a 7.8% increase in supply month-on-month.
Meanwhile, Canberra saw another marginal increase in vacancy rates from 0.9 in November to 1% in December, the highest rate recorded in 2021 seen in August and September during the lockdown.
During the month, the city recorded a 20.1% increase in the number of vacant rental advertisements.
Moving on to other smaller cities, Adelaide’s vacancy rates held steady at their lowest point since domain registrations began at 0.4%. Hobart’s vacancy rate remained unchanged at a multi-year low of 0.3%.
And while there were monthly increases in vacancy rates in Brisbane (1.2% to 1.3%), Perth (0.5% to 0.6%) and Darwin (0.9% to 1.3%), they are still at multi-year levels. low levels, according to Domain.
The majority of the markets remain in favor of the owners
While vacancy rates are higher in most capital cities, all rental markets are still working in favor of landlords except Sydney and Melbourne, the report says.
Despite the year-end increase in listings, Domain said tenants will find rental markets more competitive than last year in most cities. Looking at the bigger picture, the report showed that the number of vacant properties fell from 54,000 units in December 2020 to 37,000 in December 2021, representing a 31% annual reduction in vacant rentals.
Commenting on the tight conditions and outlook for tenants, the area’s head of research and economics, Dr Nicola Powell, said: “While we saw a slight increase in the number of rental properties available in December, we operate primarily in a proprietary market.”
She further projected that the national vacancy rate should continue to fall in early 2022.
“[It’s] we are likely to see a decrease in the number of vacant rental units, as historically strong rental demand in January reduces the number of vacant rental listings,” she said.
The expert added that rental markets would be even tighter as borders reopen and the flow of international students, overseas migrants and expats rebounds.
Providing more information, Dr Powell said the pressure would be greater for Sydney and Melbourne, as the two cities have historically taken in more foreign migrants than other cities.