Rental vacancies increase in Melbourne, as rates in rest of nation shrink

Rental vacancies in Melbourne CBD hit an all-time high in August, but availability tightened in regions and other capitals.

SQM Research found rental vacancy rates tightened in all capital cities except Melbourne through August. Picture: Phil Williams

The availability of rental properties in the Melbourne CBD hit an all-time high in August, while vacancies nationally tightened as other capitals and regions flag recovery.

The impact of the pandemic on the property market in Victoria’s capital caused the rental vacancy rate to rise last month to 3.4 per cent from 3.1 per cent in July, with an extra 2145 vacant properties in the city as lockdowns continued, said data firm SQM Research. In the CBD market the change was pronounced, up 2.2 per cent over the period to reach a new all-time high of 10 per cent

Sydney still has the highest vacancy rate in the country of 3.5 per cent, but showed a slight (0.1 per cent) improvement last month.

Nationally, the residential rental vacancy rate fell slightly in August to 2 per cent, marginally lower than the 2.2 per cent recorded at the same time last year. There are currently 69,971 vacant rentals Australia-wide.

CBD rental markets in Sydney and Brisbane were both slammed by the pandemic’s impact on migration and work practices over the past few months. However, each is now in recovery and improving from recent all-time highs in availability, with central Sydney down to 12.9 per cent from 16.2 per cent in May and Brisbane’s CBD recording 11.4 per cent vacancy from 14 per cent in June.

All capital cities except Melbourne recorded a tightening in rental numbers. Hobart’s vacancy rate is the lowest in the nation at 0.7 per cent, while Canberra and Adelaide also recorded low vacancy rates of 0.8 per cent and 0.9 per cent respectively. Perth contracted to 1.1 per cent.

Most regional locations also experienced an August fall, highlighting the ongoing shift away from inner suburban living to areas offering more room and distancing.

SQM Research managing director Louis Christopher said the shift towards regional living could prove beneficial for renters choosing to stay close to cities.

“The shift towards regional living continues at pace, largely at the expense of higher inner city rental vacancy rates. I suspect there will have to be a high point in this move soon. However, I also suspect there will be a degree of permanency with the massive population shift,” Mr Christopher said,

“Meanwhile Sydney and Melbourne rents continue to fall, providing leasing opportunities for tenants who have chosen to stay in town.”

Sydney’s Blue Mountains fell to a record low rental vacancy rate of just 0.7 per cent, as did Victoria’s Mornington Peninsula. In Queensland, Ipswich fell to just 0.9 per cent.