Australia remains firmly a landlords’ market.
According to the latest Domain Vacancy Report for October 2023, Australia’s vacancy rate holds at a record low for the second month in a row, at 0.8%.
Table 1. Monthly vacancy rates.
|Oct-23||Sep-23||Oct-22||Monthly change||Annual change|
Clearly, it remains incredibly challenging and competitive for tenants, with some cities seeing marginal improvements.
Dr Nicola Powell, Domain's Chief of Research and Economics said:
“The vacancy rate has held at this record low for the second consecutive month, with strong overseas migration and higher property prices pressurising demand at a time rental properties are chronically undersupplied.
Dwindling rental stock has visibly suffered because of a lack of investor activity, ongoing development undersupply and higher construction costs.
While the current vacancy rate is holding steady, the record low rate is concerning for tenants with the changeover period just around the corner.
This limits their options, keeps competition tough, and can lead to higher rent costs, added stress during the transition, and weakened negotiating power for tenants.
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While we anticipate a seasonal increase in rental supply in the coming months, this is shaping up to be one of the most challenging peak changeover periods tenants have ever experienced.
Nationally, the number of vacant rental listings is also at an all-time low.
This is primarily due to a decrease in available rental properties across all major cities, with the exception of Darwin.
An additional 40,000 to 70,000 rentals are needed to restore balance to the rental market and achieve a healthy vacancy rate of 2-3% in Australia.
While there is no quick fix to address affordability challenges, it is crucial that we implement policies that encourage investors to enter the market."
Looking at capital cities
According to Domain's, vacancy rates vary across the capital cities but all cities are firmly locked in a landlords’ market.
However, annually, some capitals are beginning to record high vacancy rates.
- Sydney’s vacancy rate is steady at a record low of 0.9%. This is driven by an all-time low in rental supply, highlighting the need for a significant boost. The biggest capital cities see the most immediate impacts on rental stock from overseas migration as they receive the lion’s share.
- Melbourne’s vacancy rate is steady at 0.9%, 0.1 percentage points off the record low last seen in March 2023. This is driven by a severe lack of rental supply, at an all-time low for the month of October.
- Brisbane is one of two cities to see a rise in vacancy rates, sitting at 0.8%, up from 0.7%. It has seen little movement in the last six months compared to the other capitals. This indicates the rental market is stabilising, shifting away from the highly competitive conditions and record low vacancy rate last seen in February.
- Perth’s vacancy rate is steady for the third successive month, at 0.3%, a record low. It is one of two of the most competitive cities for potential tenants. Rental supply is at an all-time low, emphasising the need for a significant boost in supply to see a change in these tight conditions.
- Adelaide is the other most competitive city for potential tenants. It is steady for the third month in a row at 0.3%, 0.1 percentage points off the record low. Stock is at its lowest level since October 2022.
- Darwin’s vacancy rate has jumped to 1.2%, the largest monthly change out of the capital cities. It is the highest vacancy rate and rental stock since February 2022. Its vacancy rate is the second highest of the capitals, rising above Hobart’s this month.
- Hobart’s vacancy rate declined for the fourth consecutive month, to 0.9%. Its vacancy rate is now the third-highest of the capitals, and this is the lowest vacancy rate since March 2023.
- Canberra’s vacancy rate is steady at 1.6%, the highest out of all the capital cities. It is 0.3 percentage points lower than the record high seen in June but has declined in recent months. However, less competitive conditions for tenants remain relative to other capital cities.