Vacancy rates for residential property have remained flat, dropping only 0.1% to a national rate of 1.8% in August, suggesting property is still hard to come by and that landlords are still in control, new figures from SQM Research show.
However, vacancies have remained higher in Melbourne, where the rate has stayed flat at 2.8% due to the onslaught of construction with that figure set to remain higher for up to two years, managing director Louis Christopher says.
“This figure is due to construction and new homes entering the market. I think Melbourne is going to experience elevated vacancy rates for the next two years.”
Nationally, vacancy rates have risen 0.3% over the past 12 months. The capacity city with the lowest vacancy rate was Canberra at just 0.6%, while Melbourne remained at 2.8% with 10,197 vacancies.
While no capital city recorded month-on-month growth in vacancies, Melbourne, Adelaide and Hobart didn’t experience any declines either. Sydney, Perth and Darwin all saw vacancy rates fall by 0.2% to 1.4%, 1% and 0.9% respectively.
The largest yearly decline was in Perth, which saw vacancies fall 0.4% to 1% since August in 2010, while the largest yearly increases have been in Melbourne and Adelaide, both rising by 0.7% over the past 12 months.
Christopher says the results show another steady month, “with two forces at play”.
“Firstly, we see that vendors who aren’t selling their properties are turning them into rental properties, although that isn’t much of a major force on the market just yet.”
“But we also see that first home buyers are continuing to hold back, that is still occurring, and it means overall we have many more renters in the marketplace.”
As a result vacancies have remained flat, although Christopher says a 1.8% result is still regarded as being quite tight. “It means it is a landlord’s market,” he says.
However, he does note that SQM is currently noting high vacancy rates for prestige areas. “That doesn’t surprise us, given the current slowdown and what’s happening to that sort of discretionary property at the moment.”
Christopher also says the growing amount of construction occurring in Melbourne also means vacancy rates are set to remain high there for up to two years, indicating downward pressure on prices is set to continue.
“This is still a low vacancy rate, it’s nothing like 4% or 5%. But it does mean that we’re going to see elevated rates there for quite awhile.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
