On Friday, SQM Research released rental vacancies data for the month of July, which suggested that Australia’s rental market tightened slightly over the month:
According to the Media Release from SQM Research:
Most capital cities either remained the same or slipped marginally during July, with Canberra the only capital city to experience an increase in vacancies, climbing 0.3% to 1.1%, a total of 637 vacancies.
Darwin is continuing to show signals of a severe rental crisis, with less than one hundred vacancies in this capital city- recording a vacancy rate of 0.4%. With 3% being the figure that SQM Research considers to be equilibrium, it is obvious that not only Darwin, but all Australian capital cities are experiencing a tight rental market, with the exception of Melbourne- which with a recorded vacancy rate of 2.9%, currently boasts the largest supply of vacant rental dwellings.
Managing Director of SQM Research, Louis Christopher says “The rental vacancy market remains steady as it has been for the course of this year, with the market overall favouring landlords. That being said, landlords would be unwise to assume that they can lease their properties at elevated levels, as we have found instances where such properties either fail or face difficulty being leased”.
SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties [see here for methodology].
Interestingly, RP Data last week released separate rental data showing that the number of homes listed for rent rose by 5,312 units (5.9%) nationally in the month of July, which suggests that the rental market loosened slightly over the month.
Some charts comparing the two sets of measures are shown below.
First, the change in rental vacancies (SQM) and rental listings (RP Data) over the month of July:
And the change in rental vacancies (SQM) and rental listings (RP Data) over the year to July 2012:
As you can see, the two data sets are contradictory when compared over the month of July 2012, but highly complementary when compared over the year.
What is also clear is that there is a large divergence in the nation’s rental markets, with Sydney (NSW), Melbourne (VIC), Adelaide (SA), Hobart (TAS) and Canberra (ACT) loosening over the year, whereas Brisbane (QLD), Perth (WA) and Darwin (NT) have tightened.
Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.
