One of the stats I watch to help me keep track of how the property investment markets around Australia are performing is the residential vacancy rates, as these flow through to rentals and investment yields.
And the latest figures released this week by SQM Research show that vacancy rates are tight in all capital cities other then Melbourne, with vacancies falling during the month of January by 0.4% on a national level and coming to a total of 54,156..
This result is similar to that of the month’s preceding the Christmas period, strengthening the assumption that December’s elevated figures were due predominantly to seasonality.
Year on year, SQM Research has recorded a modest national increase of 0.1% with many of the capital cities’ vacancy rates remaining relatively the same. Canberra and Darwin however, have recorded the most dramatic yearly differences with Canberra increasing by 0.8% in vacancies and Darwin by 0.4%.
Month on month, all of the capital cities experienced declines, with Melbourne declining by a staggering 0.6% during the month of January. However, as mentioned above, SQM Research strongly believes December’s results to be based on seasonal changes and therefore these declines are not necessarily telling of any drastic changes in the rental market.
Thus as it currently stands, the rental market although loosening somewhat since the corresponding period of the previous year (January 2012) remains for the most part – tight, with the majority of capital cities excluding Melbourne, continuing to record vacancy rates of under 3%.
Having said this, SQM Research believes with a housing recovery commencing in many parts of the country, the rental crisis that many localities have been experiencing over the past 12 months, may slowly begin to be alleviated, with potential first home buyers who have been sitting tight, now beginning exit the rental market to purchase their own homes.
Louis Christopher, managing director of SQM Research says,
“Taking into account seasonality, vacancy rates have proved to be very steady over the past two years now for the major capital cities. We note that in Hobart, there appears to be a tightening in vacancies once again, which may help existing real estate investors in what has been a severe downturn for that city.
When considering more micro localities, there are some clear pockets of oversupply and under supply such as Melbourne’s Southbank, which is recording a very high vacancy rate of 10.9% right now. This goes to show it is important to consider the local factors as well as the greater macro tides.”