SQM Researchhas released its rental vacancy series for August, which revealed a small decrease in the national vacancy rate to 2.2% from 2.3% last month; although it was up 0.1% over the year:
Over the year, decreases in vacancies were recorded in Brisbane (-0.3%), Perth (-0.8%), Adelaide (-0.2%), and Darwin (-0.6%), whereas increases were recorded across Sydney (+0.6%), Melbourne (+0.4%) and Canberra (+0.5%), and Hobart (+0.1%).
As shown in the next chart, Sydney’s rental vacancy rate is running at its highest level on record in trend terms (i.e. since 2005):
Moreover, SQM Research believes that Sydney’s rental vacancy rate will peak at 4% by the end of the year:
Residential property rental vacancy rates remained largely steady for the month of August with perhaps the exception of Perth which continues to record a recovering rental market. While Sydney did record a slight decline our expectation is the Sydney rental market will still fall from here. We believe rental vacancy rates will peak at 4% in Sydney by the end of this year.
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, with Melbourne also weakening:
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: