Rental relief on way but market remains tight: PropTrack

Rental vacancy rates are stabilising but they remain at half pre-pandemic levels as surging demand from renters far outstrips supply.

The rental crisis is showing signs of starting to ease as vacancy rates stabilise, but they are running at about half of pre-pandemic levels as surging demand from renters still far outstrips supply, according to the latest PropTrack analysis.

The group’s latest report shows that rental vacancy rates across the country remained steady in May, down by a tiny 0.01 percentage point to 1.42 per cent.

While the stabilising of rental vacancy rates is some rare good news for under-pressure renters, and reflects more rental properties coming to market, the crisis is not over yet.

The study showed that the rental market is showing tentative signs that conditions may improve over the rest of 2023. But it remains difficult to find a home and rent prices are likely to continue increasing.

“The rental market appears to have stabilised, providing some much-needed relief for renters,“ PropTrack senior economist and report author Paul Ryan said.

“Capital cities have seen rental market conditions ease over the past quarter, with vacancy rates up 0.1 percentage points. This is the most significant easing in rental market conditions since early in the pandemic in November 2020,” he said.

Mr Ryan said the improvements had been recorded widely, with all markets except Darwin, regional Queensland and WA experiencing slightly better conditions for renters compared to three months ago.

Sydney has started to see easing rental market conditions, with rental vacancy rates up 0.16 percentage points over the past three months. Picture: NCA NewsWire / Nicholas Eagar

“This easing in conditions has been primarily driven by more rental properties being brought to market following rapid rent increases,” he said. But a large sense of relief for renters may be further away.

“While rental markets have improved over recent months, rental vacancy rates remain low – still around half the levels seen before the pandemic – and it continues to be difficult to find a rental across the country. In these conditions, we expect rents to continue to grow quickly, placing additional financial pressure on renters,” Mr Ryan said.

Higher rents are contributing to the cost of living crisis and also helping to drive up the inflation rate, even as interest rates are hiked by the Reserve Bank.

Close-to-peak interest rates and limited buyer choice in the housing market has kicked off a separate chain of events that could see house prices reach a new record high as early as January.

Home prices are tracking to report annual growth over the latest financial year after markets nationally showed signs of steady gains through the first five months of 2023, according to PropTrack, which says the shock of rate rises has lessened.

On the rental front, Sydney has started to see easing rental market conditions, with rental vacancy rates up 0.06 percentage points in May and 0.16 percentage points over the past three months.

Melbourne rental markets have stabilised over the past few months, albeit at a low level of available vacancies of just 1.33 per cent. Adelaide and Perth continue to see the tightest rental market conditions with the fewest available rentals. Less than 1 per cent of rental properties are currently available for lease in these cities.