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Competition Easing Amidst Record-Low Vacancy Rates | Latest Domain Vacancy Report - featured image
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Competition Easing Amidst Record-Low Vacancy Rates | Latest Domain Vacancy Report

key takeaways

Key takeaways

The national vacancy rate returned to a record low in January, 0.8%, as rental gains continued to slow across most capital cities.

The vacancy rate in Sydney is back at a record low, while Melbourne, Adelaide and Perth are close to an all-time low.

It seems that some renters may transition to home ownership because of the rental crisis

The latest Domain vacancy report shows that the national vacancy rate returns to a record low in January, 0.8% after a seasonal rise in December.

However, there are signs the market may have turned a corner for renters as rental growth continues to slow across most of the capital cities and average views per rental listing in January lowered annually, indicating slightly less competition between renters.

Research

Dr Nicola Powell, Domain's Chief of Research and Economics said:

"Vacancy rates in Sydney are back at a record low, while Melbourne, Adelaide and Perth are close to an all-time low.

It was expected that the rental market would tighten in January as the increased demand absorbed December’s supply boost.

The glimmer of hope for renters this year does remain as we are likely moving into a period of slower rental growth and the number of prospective tenants per rental listing is easing.

This suggests that rental demand is pulling back and while it hasn’t been enough to boost the vacancy rate, it could be on the horizon."

She further commented:

"We are also likely to see some renters transitioning to homeownership with the new first-home buyer incentives in place along with a potential interest cut that will improve borrowing capacity and mortgage affordability.

We anticipate a tipping point to be reached at some stage this year, making a return to a more balanced rental market."

Monthly vacancy rates

Jan-24 Dec-23 Jan-23 Monthly change Annual change
National 0.8% 1.0% 0.8%
Combined Capitals 0.8% 1.1% 0.9%
Combined Regionals 0.8% 0.9% 0.8%
Sydney 0.9% 1.3% 1.0%
Melbourne 0.9% 1.2% 1.0%
Brisbane 0.8% 0.9% 0.8%
Perth 0.4% 0.4% 0.3%
Adelaide 0.3% 0.4% 0.3%
Hobart 0.7% 0.8% 0.5%
Canberra 1.5% 2.0% 1.5%
Darwin 1.4% 1.7% 1.3%
Source: domain

Table 2. City areas with the highest vacancy rates.

Rank                  Sydney Melbourne Brisbane & Gold Coast Perth Adelaide
1 Dural – Wisemans Ferry (2.7%) Macedon Ranges (2.4%) Kenmore – Brookfield – Moggill (1.8%) Mandurah (0.7%) Adelaide City (0.8%)
2 Rouse Hill – McGraths Hill (2.5%) Melbourne City (2.2%) Gold Coast Hinterland (1.7%) Armadale (0.7%) Norwood – Payneham – St Peters (0.5%)
3 Pittwater (2%) Melton – Bacchus Marsh (1.9%) Jimboomba (1.5%) Cottesloe – Claremont (0.6%) Burnside (0.5%)
4 Ku-ring-gai (1.8%) Whitehorse – West (1.8%) Sherwood – Indooroopilly (1.5%) South Perth (0.6%) Unley (0.5%)
5 Blacktown – North (1.7%) Manningham – East (1.7%) Brisbane Inner (1.4%) Serpentine – Jarrahdale (0.5%) Campbelltown (SA) (0.4%)

Looking across the capital cities

Sydney

  • Sydney’s vacancy rate fell in January, returning to a record low of 9%. This is driven by rental supply being at its lowest for the month of January.
  • Average views per rental listing have surged over the month, the highest of the capitals, showing increasing demand amidst the changeover period.
  • However, views per rental listing are lower annually — trending downward since mid-2023 — suggesting rental demand is beginning to slow.

Melbourne

  • Melbourne’s vacancy rate fell to 0.9%, 0.1 percentage points off its record low. This is the first monthly decrease since September, driven by rental stock sitting at an all-time low for the month of January, not surprising given the surge in activity during the changeover period.
  • It was also supported by a monthly increase in average views per rental listing. Despite the monthly rise, views per rental listing have dropped annually — a consistent trend since mid-2023 — suggesting rental demand is beginning to slow.

Brisbane

Brisbane

  • Brisbane has seen its first monthly decline since September, sitting at 8%. This is influenced by a drop in vacant rentals and a rise in average views per rental listing.

Adelaide

  • Adelaide is the most competitive city for potential tenants, falling to 3% and 0.1 percentage points off its record low.
  • Increased rental supply is needed to see a shift away from these tight conditions.

Canberra

Canberra

  • Canberra’s vacancy rate decreased to 1.5%, the largest monthly change in the capitals.
  • However, conditions remain less competitive for tenants relative to other capitals.

Perth

  • Perth was the only city with a steady vacancy rate of 0.4%.
  • However, it remains stubbornly tight, needing to see a significant boost to rental stock before conditions improve for

Hobart

Hobart

  • Hobart’s vacancy rate fell to 7%. This is the lowest vacancy rate since February 2023 and a remarkable shift away from its record high seen in June 2023.

Darwin

  • Darwin’s vacancy rate declined to 1.4%, the second highest of the capitals.
  • This is supported by a drop in rental stock and an increase in average views per rental listing.
About Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.
2 comments

Maybe the rent hikes have slowed down in the top tear "fast lane" but the bottom end still has a lot of catching up to do. Especially from rents that were smashed during COVID-19 which are still trying to catch up with the rest of the market. That is ...Read full version

1 reply

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