Rental vacancies down in October

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By Leith van Onselen

SQM Research has released rental vacancies data for the month of October, which revealed that the vacancy rate nationally fell by 0.1% to 2.0%, with most capitals experiencing declines:

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According to SQM Research:

SQM Research does expect vacancies to begin to rise in the lead up the Christmas as this normally occurs during this time of year.

Observing the figures year-on-year, vacancies in some cities of Australia are much higher than this time in 2012, particularly in Perth, Brisbane and Canberra. Sydney has appeared to have held steady, despite a swift increase in sales activity in this capital city, pointing further to indications that the recovery being experienced there has been predominantly motivated by investors, rather that first home buyers at this stage.

The city of Hobart is clearly recording lower vacancies than 12 months ago and is now getting to the point where there will be upward sustained pressure on rents as the market turns back into the favour of landlords.

Louis Christopher, Managing Director of SQM Research says, “Nationally it is the fourth straight month where rental vacancies have tightened though I note this same trend happened this time last year. Sydney is an interesting case. We know the sales market is very active and normally in most recoveries, vacancies rise as renters turn themselves into first home buyers. But Sydney is now recording a very tight vacancy rate of 1.5%. Its evidence that the First Home Buyers are indeed remaining renters for longer. If Sydney vacancies remain this low, that will put renewed upward pressure on rents again for next year.”

Leith van Onselen

Comments

  1. TheRedEconomistMEMBER

    Rents have remained static in Sydney for the last couple years.

    No we get articles that vacancies are decreasing. What bollocks.

    Plenty of rental around… little competition.

    Now the scare campaign from usual suspects that you better buy now or be priced out forever.

    • Rents have remained static in Sydney for the last couple years …. What bollocks …. Plenty of rental around… little competition.

      Let me guess. You are rich and spend less that 20% of your income on rent.

      You will find that ordinary working people in Sydney are suffering a great deal from high rents.

      • Yes – Claw that is correct. Rents remain far too high.

        Rental vacancies should be at least 5% (5% should be when the warning lights start flashing).

        Anything less than that demonstrates a tight market with insufficient supply.

        When rental vacancies are at least 5% we will have a much better idea of what a realistic rent should be.

        A 5% vacancy rate merely means that over the course of a year a landlord should expect the property to be vacant for about 2.5 weeks. In any other accommodation business (motels, hotels, serviced apartments etc) the landlord would be jumping for joy if they achieved 95% occupancy rates.

      • TheRedEconomistMEMBER

        You will also find working people in Sydney suffering more from High mortgage repayments at historically low interest rates.

        And regarding percentage of income on rent…

        On our take home wage alone (1 fulltime + 3 day part time) – 24.36%.

        Even less if you count investment income on share and 6 figure Cash balance.

        This is on a 3 bedroom house on a 800 Sqm Block… 25km from Sydney CBD. Similar houses go for $700K these days unfortunately

        Plus I pay no maintenance cost, council rates, water bills.

        If you find a good landlord … and you fix some small things yourself… you do not get rent increases.

        If the landlord tries to increase your rent.. remind them about the thing you have fixed at no cost to them, and whether they want to risk another tenant who may not be as reliable and helpful as yourself.

      • You have really got it made red economist you live a great life. No maintenance no. Rates. How have you come up with this great racket. Tell us more about your deductive skills of life.

      • There is no free lunch you will be paying all maintenance and rates in the long run via opportunity cost or rent. There is no way around it in the long run.

      • “A 5% vacancy rate merely means that over the course of a year a landlord should expect the property to be vacant for about 2.5 weeks. In any other accommodation business (motels, hotels, serviced apartments etc) the landlord would be jumping for joy if they achieved 95% occupancy rates.”

        Under the SQM definition of vacancy rate a property needs to be advertised for 3 weeks before being counted.
        By your example, the vacancy rate would actually be 0% not 5%.
        The REIWA figure puts it at 3.4% but they use different methodology.

  2. I rent in Perth. Last year I took the only rental I could get at a price decided by my landlord. I’m up for review now and there are eight properties similar to mine which I could move to and the agents are offering me discounts on the asking price. It is good to see that my anecdotal evidence is backed by this data.

  3. “Its evidence that the First Home Buyers are indeed remaining renters for longer.”

    Really?

    It’s evidence Ponzi Joe is deliberately driving population growth at over 1000 extra people per day.

    • Yes YP that it almost certainly the case, but in Perth jobs are disappearing at a quick rate as mining services companies shed their workforces. This is one expensive town to live in if your income dries up. Again anecdotally I have a number of friends on 457s who are packing their bags and going and you just don’t get the feeling that the same numbers are arriving in WA as were previously. The unemployment rate is of course masked by part-time workers and lost 457s so it will be very interesting to have the full picture over the coming months.

    • +100

      People have become so accustomed to dysfunction that when Melbourne started having some degree of construction activity they thought it was a tsunami of new stock.

      The vacancy rates demonstrate very clearly that it is not nearly enough – especially having regard to population growth rates.

      When Melbourne vacancy rates start with the numeral 5 we are making real progress.

      • True. Given our population growth rate of around 2% in recent years – high by anybody’s standards – there should be a national flurry of housing construction.

        Living in Sydney, so distorted is the market by various planning controls, and a flood of investment money, all I’m seeing is a flurry of high-rise buildings going up. Not the building of new fringe suburbs of detached housing, and townhouse and walk-up unit construction in established areas, that most people would choose to live in.