As shown above, every jurisdiction recorded either no change or a fall in rental vacancy rates in September.

Clearly, the commodities bust continues to weigh heavily on both Darwin and Perth, with vacancy rates jumping by 1.5% and 1.2% respectively over the year, and both jurisdictions tracking well above the 3% threshold.

By contrast, the bubble epicentres of Sydney (1.7% – no change YoY) and Melbourne (2.2% – down 0.3% YoY) remain relatively tight, as do Adelaide (1.9% – up 0.4% YoY), Canberra (2.2% – up 0.1% YoY), and Hobart (1.0% – down 0.4% YoY).

SQM Research also released asking rents data for the week ended 20 October 2015, which again recorded sharp falls in rents in Darwin and Perth, which have held down asking rents nationally:

Asking rents in Darwin, in particular, have tanked by 18.8% for houses and by 15.1% for units over the past 12 months. Meanwhile, Perth’s rents are down by 7.5% for houses and by 7.2% for units over the year.

By contrast, Melbourne has recorded relatively strong rental growth of 5.0% (houses) and 1.0% (units).

According to SQM Research managing director, Louis Christopher:

“It was a steady result for residential property vacancy rates in September after the rise recorded in August. Hobart appears to be entering into a very tight rental market with a vacancy rate now down to 1%. Asking rents have also been accelerating there. On the other hand, the cities of Perth and Darwin still look very weak.”

It remains our view that Darwin’s and Perth’s housing markets are stuffed, given mining capex has barely begun to unwind (see below charts).

Melbourne’s rental market strength also seems odd when viewed in light of the dwelling construction boom, which is occurring as population growth falls:

Those foreign investors must be keeping their properties vacant.

unconventionaleconomist@hotmail.com

Australia’s two speed rental market