National Rental Market Report — May 2021: Rental Markets Now Tightening Across-the Board — Rents Rising and Rising

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Home rental vacancies have continued to fall over May with most capitals now reporting increasing shortages of both houses and units for rent.

Rental Market Price Rise

Although Inner-suburban and CBD unit markets in Melbourne and Sydney continue to record high vacancy rates, the number of advertised vacancies in these areas has declined sharply over the past month — falling by 10% in Melbourne and 5% in Sydney.

The re-opening of borders has resulted in increased tourist and business travel that is fuelling increased demand for the short-term accommodation tenancies in inner Melbourne and Sydney that added to supply in the permanent rental market over the past year.

Vacancy rates for houses continue to fall with most capitals now remarkably at or under 1% and, although Sydney and Melbourne are hovering around 2%, rates in those capitals are declining.

Rental Vacancy Rates May 2021

Syd Melb Brisb Adel Prth Hbrt Drwn Cnbrr
House 1.8% 2.1% 0.9% 0.6% 1.0% 1.0% 0.8% 0.4%
Unit 4.2% 5.2% 1.9% 1.3% 1.5% 1.2% 0.9% 1.1%
Total Homes 3.1% 3.4% 1.4% 0.8% 1.1% 1.0% 0.9% 0.7%

Similarly, unit vacancy rates also continue to fall across-the-board with all capitals reporting declines over May and, with the exception of Melbourne and Sydney, most rates are now well below 2%.

Rental Vacancy Rates Trend May 2021
Syd Melb Brisb Adel Prth Hbrt Drwn Cnbrr
House
Unit
Total Homes

Most capitals reported increases in house rents over May with the exception of Melbourne and Darwin.

House rents have skyrocketed over the past year with Adelaide, Perth, Darwin, and Canberra reporting extraordinary results approaching 20%.

Brisbane, Adelaide, Perth, and Canberra have also recorded extraordinary unit rent increases over the past year.

With vacancy rates continuing to tighten, higher rents can be expected and clearly impacting housing affordability.

Canberra remains clearly the most expensive capital for house and unit rents and significantly higher than the other capitals.

Rental vacancies continue to fall and rents, in response, continue to rise with no prospect of an easing of what are clearly accommodation shortages.

Syd Melb Brisb Adel Prth Hbrt Drwn Cnbrr
House $520 $425 $430 $440 $450 $520 $590 $660
Annual Change -1.9% -5.6% 7.5% 10.0% 18.4% 9.5% 18.0% 14.8%
Unit $450 $370 $420 $380 $410 $400 $400 $530
Annual Change -10.0% -11.9% 13.5% 8.6% 13.9% -4.8% 0.0% 8.2%

Although Sydney and Melbourne inner city and CBD unit markets are still offering plenty of choices for tenants, vacancies in those areas are now falling sharply.

Record low activity from investors over recent years due primarily to credit restrictions together with the subdued new home building has acted to undersupply rental markets.

Increased demand from prospective first homebuyers pushed out of housing markets by booming home prices will exacerbate the mismatch between rental supply and demand in most capitals and continue to place upward pressure on already high rents.

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About

Dr Andrew Wilson, Chief Economist of www.MyHousingMarket.com.au is widely regarded as Australia’s leading property economist.


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