PropTrack national rental vacancy rate unchanged in July as more property investors enter market
The country’s rental market is benefiting from more property investors looking to take advantage of price growth, but inbound migration levels will have a role to play in vacancy rates.
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A strong increase in the number of property investors has seen the rental market show signs of stabilising in July, providing renters with more choice after record low vacancy rates in the past 18 months.
Data from PropTrack shows the national rental vacancy rate fell by 0.01 percentage points to 1.42 per cent in July. The slight drop in vacancy was driven by regional markets, which recorded a 0.04 percentage point decline, while capital cities were unchanged at 1.47 per cent over July.
Rental supply has improved over the past three months with the national vacancy rate rising 0.18ppt to 1.42 per cent. Capital cities have seen the largest improvement, with vacancy up in six of the eight cities over the quarter.
Stabilisation and the return of property investors in the rental market is welcomed by many renters, who have seen stock levels fall 43 per cent compared to the start of the pandemic, at the same time the nation’s population rose the most on record following record levels of migration, which saw 547,300 net arrivals in 2023.
PropTrack senior economist Anne Flaherty said the rental market remained tight, with vacancy rates half of what was considered balanced, but more investors had helped to ease rental price growth.
“It’s still very tough for renters. Improving vacancy rates in the past three moments has been one of the reasons as to why rental growth is slowing, but slow is the keyword as prices are still increasing,” she said. “Renters are still having to apply very quickly and many are getting knocked back more than they otherwise would in a healthy market.”
Recent data from PropTrack showed that national rents were unchanged in the June quarter, at $600 a week, but had increased by 9.1 per cent, or $50, since June 2023. New loan commitments to investors were up 25 per cent over the June quarter of 2024 compared to the same period last year.
Ms Flaherty said more investors was mixed news for renters looking to break into home ownership with more competition for properties at the lower end of the market that typically appealed to first-home buyers. She said with building approvals at a decade low, the rental market’s future trajectory was at the mercy of migrant arrivals.
“What’s happens to the market really depends on the level of population growth because overseas migration is the No 1 driver of population growth. When people first come to Australia, they’re more likely to be renters for the first five to 10 years before looking down the path of becoming buyers,” she said.
“By not building more homes, we are driving home prices higher which is also trapping people in the rental market for longer than they would like.”
The vacancy rate in Sydney was unchanged in June at 1.68 per cent following a 0.36 percentage point jump in the previous three months, while Melbourne lifted 0.05 percentage points to 1.56 per cent, according to PropTrack.
Levels were lower in other capital cities, with Brisbane down slightly at 1.16 per cent, Perth flat at 1.26 per cent and Adelaide with a vacancy rate of 1.06 per cent.
Darwin had the lowest vacancy rate in the country at 1.03 per cent, while Canberra had 2 per cent of rental properties vacancy.
“Canberra, and Hobart are the only two capital cities building homes at a rate that is exceeding population growth, which is giving people more choice,” she said.
“This is also causing home prices to not rise as fast as elsewhere. More homes in those locations is helping ease conditions.”
Rent was among the most significant contributors to inflation in the June quarter, according to the Australian Bureau of Statistics, up 7.3 per cent in the period.
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Originally published as PropTrack national rental vacancy rate unchanged in July as more property investors enter market
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