Domain has released its June Rental Vacancy Report, which has reported extreme tightness across most markets:
The below charts show the vacancy rates across each capital city market.
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The tightening rental vacancies explains the surge in rental growth across Australia, which rose by 8.9% in the year to September 2021. This was the fastest annual rental growth since the GFC in 2008:
According to Domain’s chief of research and economics Nicola Powell, the rental market is likely to tighten even further once the international border reopens and immigration is rebooted:
“I do think we will see additional pressure on rental markets in Melbourne and Sydney once overseas migration goes back to normal,” said Dr Powell.
“We know that the majority of people arriving from overseas choose Sydney or Melbourne as their destination, we have seen those rental markets have a greater disruption because of a lack of overseas migrants.”
Record property prices could also leave more Australians renting for longer, increasing demand for rental properties and making it harder for first-home buyers to save a deposit.
“It’s a vicious cycle. If a tenant is paying more in rent, they have less spare cash, which means their savings journey to actually buy becomes harder,” Dr Powell said.
I also expect there to be an outward migration from Melbourne and Sydney to smaller capitals and the regions, which will keep those rental markets tight.