SQM Research has released its rental vacancy series for July, which revealed a small rise in the national vacancy rate to 2.3% from 2.2% last month; although it was steady over the year:
Over the year, increases in vacancies were recorded in Sydney (+0.7%), Melbourne (+0.4%) and Canberra (+0.3%), whereas they fell in Brisbane (-0.5%), Perth (-1.0%), Adelaide (-0.2%), Hobart (-0.2%), and Darwin (-0.5%).
As shown in the next chart, Sydney’s rental vacancy rate has hit its equal highest on record (since 2005):
Moreover, SQM Research believes that Sydney’s and Melbourne’s rental vacancy rates will rise over the remainder of this year:
While rental vacancy rate held steady in Sydney and Melbourne, they fell in most other cities over July. Perth continues to record a recovery in its rental market which should eventually feed through into a rise in dwelling prices. After a false dawn, Darwin also appears to be recording tentative signs of a rental recovery.
Going forward, the expectation remains that Sydney and Melbourne will record higher rental vacancy rates in the 2nd half of this year driven by ongoing high levels of dwelling completions from the tail of the last property boom.
Turning to asking rents, the picture remains two-speed, with annual asking rents falling across the combined capitals, dragged down by Sydney where rents are plummeting, as well as Darwin:
The situation in Sydney should turn next year, however, with both dwelling approvals and commencements plummeting at the same time as population growth is increasing: