By Leanne Jopson May 1, 2024

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Rental supply is on the rise in these areas

Property Investment
Rental supply is on the rise in these areas

Key takeaways

Australia's rental market is experiencing a severe crisis characterized by record-low vacancy rates, limited rental stock, and rising prices. Despite the overall trend, some regions are seeing an increase in rental properties available for tenants. This includes areas like West Coast (TAS), Macedon Ranges (VIC), and Katherine (NT), among others.

While some regions show improvement, the rental crisis is not abating nationwide. Most areas, including major cities and regions, continue to face significant challenges in finding rental accommodations.

The shortage of rental properties is exacerbated by a large number of investors selling properties during the property boom, high borrowing costs deterring new investors, and government policies discouraging investment in the market.

Despite the current challenges, there is a potential long-term opportunity for property investors. Low consumer confidence and subdued market activity could present favorable conditions for investors with a strategic, long-term approach.

Australia’s rental market is in crisis with vacancy rates at all-time lows, slim rental stock and skyrocketing prices.

But there are some areas bucking the trend.

New PropTrack data shows that in some regions, the availability of rental properties is actually increasing.

Could this be a sign that our rental crisis is turning a corner?

First, let's take a look at national rental vacancy rates for today.

Rental vacancy rates are at a record low

National rental vacancy rates tell another 0.12% to just 1.07% in February, recording the lowest level of available rental properties ever.

Source: PropTrack

Australia’s major capital cities suffered the largest fall in availability over the month, with a 0.14% decrease.

Meanwhile, vacancy rates in regional areas across the country also fell a smaller 0.7%.

The areas bucking the trend

Australia’s national vacancy rates are sitting at a scarily low level, but as always, not all suburbs are equal.

PropTrack’s data shows that there has been an increase of choice for renters in some areas over the past quarter.

Looking at the Australian Bureau of Statistics (ABS)’s Statistical Areas Level 3 (SA3) regions, PropTrack was able to identify the top 10 regions with the largest increase in rental supply.

Some of which have seen an uptick as high as 1%.

SA3s generally have a population of between 30,000 and 130,000 people and often closely align to large urban Local Government Areas, for example, Geelong.

And the regions listed aren’t concentrated in one area either, they’re spread across 6 different states.

The West Coast region located in regional Tasmania led the top 10 list thanks to a 1% increase in its rental vacancy rate since November 2023.

The area now has the highest vacancy rate across the country, at 4.1%, nearly 4 times the national average.

In second place is Melbourne’s Macedon Ranges where the vacancy rate is currently 2.0% having risen another 0.95% over the past quarter.

Katherine in the Northern Territory is third, with a 2.42% vacancy rate thanks to a 0.93% increase over the past quarter.

Victoria features three more times on the top 10 list making it the state with the majority of the high movers for vacancy rates.

Rental vacancies in the Mornington Peninsula rose 0.72% over the period while region VIC also saw increases.

Creswick - Daylesford - Ballan and Sheppardton saw the number of available rental properties rise 0.61% and 0.57% respectively.

Here’s the full list:

Regions with the largest quarterly growth in rental vacancy rates

Location (SA3)	State	City or Region	Vacancy rate	Quarterly change (percentage point)
West Coast	TAS	Rest of Tas.	4.1%	1ppt
Macedon Ranges	VIC	Melbourne	2.0%	0.95ppt
Katherine	NT	Rest of NT	2.42%	0.93ppt
Mornington Peninsula	VIC	Melbourne	2.07%	0.72ppt
Tumut - Tumbarumba	NSW	Rest of NSW	2.87%	0.7ppt
Gold Coast Hinterland	QLD	Rest of Qld	2.23%	0.62ppt
Creswick - Daylesford - Ballan	VIC	Rest of Vic.	2.37%	0.61ppt
Mid West	WA	Rest of WA	1.57%	0.6ppt
Shepparton	VIC	Rest of Vic.	1.31%	0.57ppt
Surfers Paradise	QLD	Rest of Qld	1.68%	0.56ppt

Source: PropTrack

Does this mean our rental crisis is turning a corner?

It’s bad news I’m afraid.

No, there is no end in sight for Australia’s rental crisis.

The data for vacancy rates in these areas is encouraging, but the reality is these areas are an exception to the rule, not the new rule.

Australia’s rental crisis isn’t going to be resolved any time soon… in fact, it’ll probably just worsen further.

In most capital cities and regional areas, renters are finding it as, or even more, difficult than a year ago and much more challenging versus pre-pandemic times.

The problem is that supply is extremely low - a huge proportion of investors sold up amid the property boom while current high borrowing costs mean there are fewer investors buying investment properties.

At the same time, government intervention is actually dissuading investors back into the market.

And all this when the supply of new builds is also incredibly thin and unable to keep up with surging demand.

After all, population growth and migration numbers are surging and smaller households have increased the number of properties that we need.

While there are limited short-term solutions to improve rental availability, these tough conditions are likely to persist and renters will continue to feel the strain.

A window of opportunity for investors

The good news among all this is that I see a window of opportunity for property investors with a long-term focus right now.

This window of opportunity is not because properties are cheap, but when you look back in 3 years' time the price you would pay for the property today will definitely look ‘cheap’.

The opportunity arises because consumer confidence is low and many prospective homebuyers and investors are sitting on the sidelines.

Sooner rather than later many prospective buyers will realise that interest rates and inflation have peaked as the RBA's efforts have brought it under control.

And at that time pent-up demand will be released as greed (FOMO) overtakes fear (FOBE - Fear of buying early), as it always does as the property cycle moves on.

We saw an opportunity like this in late 2018-early 2019 when fear of the upcoming Federal election stopped buyers from entering the market.

And look at what's happened to property prices since then.

I saw similar opportunities at the end of the Global Financial Crisis and in 2002 after the tech wreck.

History has a way of repeating itself.

Strategic investors will take advantage of the opportunities our property markets will offer over the next couple of years maximising their upsides while protecting their downsides.

Now I'm not suggesting taking advantage of tenants, what I'm suggesting is to recognise there is currently a problem (lack of rental accommodation) and provide a solution.

And remember, while the current property market might not be attractive for investors right now due to high costs, government interventions, and a low supply of property for sale, it’s important to remember that property investment is a long-term game.

About Leanne Jopson 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.