SQM: Australia’s rental market collapses


SQM Research has released its rental vacancy data for April, which recorded a massive increase in vacancies, driven by inner-city areas, alongside crashing rents.

As shown in the next table, vacancy rates nationally surged by 0.6% over the month, driven by massive increases in Sydney (+1.0%), Melbourne (+0.9%) and Brisbane (+0.7%):

The increase in vacancies was extraordinary in inner-city areas, which are ground zero for both Airbnbs and international students:


In both Sydney and Brisbane, inner-city rental vacancies roughly doubled over the month.

Meanwhile, asking rents have also collapsed:


SQM Research’s managing director, Louis Christopher, noted that this is one of the sharpest rental market collapses on record, heightening risks of a depression in residential construction:

“This is one of the largest one month rises ever recorded on our vacancy rates series. The blow out in rental vacancy rates for the major CBDs suggests a mass exodus of tenants occurred over the course of March and April. This might be attributed to the significant loss in employment in our CBDs plus the drop off in international students. We are well aware of a surge in short term accommodation now being advertised for long term leasing.

The question now begs is how long will we see such high rental vacancies? If it is sustained throughout the course of the year, then we can expect far deeper falls in rents which will be good news for tenants but a disaster for landlords. There will also be economic consequences with further sharp falls in building approvals likely; thereby risking a major depression in our residential construction sector as well as the rather obvious risks for housing prices.”

How long until the rental bust morphs into a price bust?

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.