Rental vacancy rates remained steady in July with help of increased investor activity

As Australia’s population grows and demand for rental properties increase, one factor has ensured rental vacancy rates remained relatively steady throughout July.

National vacancy rates held relatively steady in July as a new report revealed a boost in investor activity counterbalanced an increase in demand for rental properties across the country.

The latest PropTrack Market Insight report found an increase in rental property supply offset demands stemming from population growth.

The national vacancy rate dropped by just 0.01 percentage points (ppt) to 1.42 per cent in July after rates steadily increased by 0.18 ppt in the past three months.

Increased rental property supply offset demands caused by population growth. Picture: NewsWire / Max Mason-Hubers

While capital cities remained steady at 1.47 per cent, regional markets recorded a 0.04 ppt decline month-on-month, which drove the slight drop nationally.

After a 0.36 ppt increase over the past three months, Sydney’s vacancy rate remained at 1.68 per cent in July.

Data revealed Melbourne was the only capital city to experience a rise in vacancy rates last month, with a 0.05 ppt increase to 1.56 per cent.

Canberra reached its highest rate of vacancy in 12 months after a experiencing a 0.20 ppt increase to two per cent.

While Darwin recorded the lowest vacancy rate of any capital city, reaching just 1.03 per cent after a drop of 0.15 ppt, Hobart experienced the most dramatic decline in vacancy rates, down 0.17 ppt to 1.11 per cent.

Rental vacancy rates in capital cities remained steady at 1.47 per cent. Picture: NewsWire / Jeremy Piper

In Brisbane, vacancy rates hit 1.16 per cent after a 0.05 ppt decrease.

Perth experienced a slight decline of 0.01 ppt, which brought vacancy rates to 1.26 per cent and Adelaide’s vacancy rates reached 1.06 per cent after a 0.08 ppt drop.

PropTrack Senior Economist Anne Flaherty said while conditions remain “incredibly tough” for renters throughout Australia, rental supply has increased within the past three months.

“Capital cities have seen the largest improvement, with vacancy up in six of the eight cities over the quarter,” she said.

“Supporting the rise in capital city vacancies has been an increase in investor activity, with the number of new loan commitments to investors up 25 per cent over the June quarter of 2024 compared to the same period last year.”

Ms Flaherty said increased investor activity has ensured more rental properties are “hitting the market” and counteracting the rising demand caused by population growth.

Melbourne was the only capital city to experience an increase in rental vacancy rates. Picture: NewsWire / Max Mason-Hubers

“Regional areas, in contrast, have seen conditions deteriorate further, with vacancy falling to 1.28 per cent in July. Vacancy in the regions has now held below capital city levels for three consecutive months.”

It comes as new data from SQM Research revealed Australia’s rental market could be taking a turn after figures showed capital city asking rents recorded their largest monthly falls in July since Covid hit.

Out of the five major cities, Sydney lead the charge with a one per cent decrease in July.

The average decline in rents for all capital city dwelling types was 0.5 per cent.