Rent increase likely as vacancy rates fall

The lowest level of availability in nearly a decade is expected to start putting a holes in the pockets of suburban and regional renters in coming months.

Rental vacancy shrunk in all capital cities last month, according to SQM Research. Picture: Phil Williams

Rents in suburban and regional markets are expected to surge in coming months as the number of available rental properties ­nationally slipped in April to the lowest level in almost a decade.

Only 66,411 properties were on offer as of mid-May, according to data house SQM Research. The 1.9 per cent vacancy across the nation’s rental stock is the lowest such figure since 2013.

Much of the decline in stock was in the suburban areas of capital cities and booming regional centres such as the Gold Coast and Byron Bay, said SQM managing director Louis Christopher.

However, the inner rings of Melbourne and Sydney still have elevated levels of apartment ­vacancies due to the loss of international students and an oversupply.

“I believe we are also seeing the number of occupiers per dwelling falling, which is putting pressure on vacancies,” Mr Christopher said.

“People are also looking for larger properties as they work from home and not wishing to live together. The fall in national vacancies is surprising given there has been record first-homebuyer activity and strong dwelling completions relative to the population expansion. Demand for rental accommodations is still outstripping supply, which is having the effect of boosting rents in many locations and [making it] unaffordable to lower-income tenants.”

Rental vacancies fell 0.2 percentage points month on month, falling from 2.1 per cent (72,436 properties) in March to 1.9 per cent in April. At the height of the national COVID-19 lockdowns in April last year, national vacancy rates sat at 2.6 per cent (88,668 properties).

Vacancy levels in all capital cities either fell or held steady last month. Melbourne recorded the highest level of availability last month (4 per cent), while Sydney tightened to 3.1 per cent. A smaller 1.4 per cent of stock was available in Brisbane, followed by Perth (0.9 per cent) and Adelaide (0.7 per cent), which each held steady.

Canberra (0.7 per cent), Darwin (0.5 per cent) and Hobart (0.5 per cent) were the tightest markets in the nation.

Rents in these cities have already started to rise, up 0.4 per cent for houses to $557 a week and 0.2 per cent higher for units to $411. Over the year, capital city rents rose 3.3 per cent for houses, but fell 3.7 per cent for units.

By Mr Christopher said these increases were more likely to be felt in regional areas in the coming months. “Suburban vacancy rates continue to fall and that is now encompassing inner-suburban regions,” he said.

“These were just about the only areas recording rises in ­vacancy rates excluding Sydney’s Liverpool. Along with the smaller capitals, Brisbane’s vacancy rate has become extremely tight and so we are expecting a surge in rents for the city this year.

“We are also seeing a surge in rents as vacancies drop on the Gold Coast and on the NSW north coast, which includes Ballina and Byron Bay, as people ­migrate out of the big capital cities and move to regional and warmer locations.

“On the Gold Coast, asking rents have soared by 32 per cent for houses and 14 per cent for units over the year. Rents too have jumped in the smaller cities, especially in Perth and Darwin, and we could see that trend continue given the commodities boom we are now seeing for iron ore and other base metals.”