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July Vacancy Rates Down

Figures released by SQM Research reveal that the level of vacancy rates dipped slightly during July, falling by 0.1% to 1.9% on a national level and coming to a national total of 52,901.

This figure represents a decline of 1,712 vacancies month-on -month.

Most capital cities either remained the same or slipped marginally during July, with Canberra the only capital city to experience an increase in vacancies, climbing 0.3% to 1.1%, a total of 637 vacancies.

Darwin is continuing to show signals of a severe rental crisis, with less than one hundred vacancies in this capital city- recording a vacancy rate of 0.4%.

With 3% being the figure that SQM Research considers to be equilibrium, it is obvious that not only Darwin, but all Australian capital cities are experiencing a tight rental market, with the exception of Melbourne- which with a recorded vacancy rate of 2.9%, currently boasts the largest supply of vacant rental dwellings.

Managing Director of SQM Research, Louis Christopher says “The rental vacancy market remains steady as it has been for the course of this year, with the market overall favouring landlords. That being said, landlords would be unwise to assume that they can lease their properties at elevated levels, as we have found instances where such properties either fail or face difficulty being leased.”

My thoughts:

While low vacancy rates are good news for property investors I would disagree with the old concept that a vacancy rate of “3% is equilibrium” for properties.

It seems that now vacancy rates have to drop below 2% before rents start to rise. Melbourne is a great example of this. With an overall vacancy rate of under 3%, there is still an oversupply of rental properties in Melbourne and in general rents are soft.

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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