Domain Rental Vacancy Rate September 2019: Is the renters’ market in Sydney coming to an end?

Originally posted on by Eliza Owen

The national rental vacancy rate was steady over September, at 1.9 per cent. This is a reflection of most capital city markets, with five cities showing no change in the rate over September.

The national rental vacancy rate was steady over September, at 1.9 per cent. This is a reflection of most capital city markets, with five cities showing no change in the rate over September.

Rental Vacancy Rates
Sep 2019Aug 2019Sep 2018MoM ∆YoY ∆

Source: Domain
The vacancy rate represents the portion of available, empty rental properties relative to the total stock of rental property. The rental vacancy rate is based on adjusted Domain rental listings and will be subject to slight revisions over time.

The one market that did see a drop in the vacancy rate was Sydney. In September, the rate was 2.9 per cent, its lowest point since April 2019. This monthly 10-basis point decline equates to approximately 420 fewer vacancies across the city.

The biggest tightening across Sydney was in Randwick, where 45 fewer vacant rentals were listed. This is off the back of an enormous uplift in rental inquiries to the area over the September quarter, which may be a reflection of UNSW students securing accommodation before the start of its third term. 

September is the third consecutive month of decline in Sydney’s rental vacancy rate. Even though the rate is still 50 basis points higher year-on-year, it could signify a turn in market dynamics, and lead to steadying rent prices in the next few quarters. 

This is because a fall in investment activity has limited the supply of new rentals against steady population growth, so more vacancies have been absorbed. 

In Melbourne, the vacancy rate rose 20 basis points to 1.8 per cent in September. This was due to an estimated 670 additional vacancies across the city. 

The largest increases in vacancies across Melbourne over the month were seen in inner-city areas, such as North Melbourne and Carlton.  

Similar to Sydney, Melbourne vacancy rates are higher year-on-year. However, due to continued strong rental demand, Melbourne has the fourth-lowest vacancy rate of the capital cities, above the smaller markets of Hobart, Adelaide and the ACT.

Across the ACT, the September rental vacancy rate is 1.1 per cent. This is a low vacancy rate relative to the national figure, and is unchanged from the previous month. However, the rental vacancy rate has increased a substantial 50 basis points year-on-year. 

The elevated levels of vacancy across the ACT may also be a relief for tenants, because it the added choice of stock may put downward pressure on rents. ACT houses are currently the most expensive rental market of the capital cities.

The Brisbane vacancy rate was unchanged in September at 2.2 per cent. However, the rate has come down year-on-year from 2.6 per cent. 

Tighter vacancies across Brisbane will be welcomed by investors. It comes off the back of steady population growth across the city, alongside a drop-off in dwelling completions. 

The March quarter building activity data from the ABS suggests dwelling completions across Queensland fell 11 per cent over the year, and completions are returning to long-run average levels. 

Perth and Darwin have seen the strongest declines in rental vacancy rates in the year to September, falling 70 and 90 basis points respectively. Despite large annual declines, both rental markets had steady vacancies over the month, and still have relatively high portions of vacancies. 

The tightest rental markets, with the fewest options available for tenants, are Adelaide and Hobart. 

In Adelaide, the September rate was 0.8 per cent, representing 1200 vacancies; steady on the previous month. 

In Hobart, the vacancy rate for September was 0.5 per cent. In a small rental market, this represents just 120 vacant properties. In what may pose some relief for renters, the vacancy rate is trending upward from its low point of 0.2 per cent in October 2018.

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