Tightening rental market strangles tenants

Domain’s latest rental report shows that the nation’s vacancy rate remains at a record 1.0%, down 1.7% year-on-year.

Vacancy rates are highest in Sydney (1.4%) and Melbourne (1.6%), with all other capitals having vacancy rates well below 1.0%:

Rental vacancy rates

Record low rental vacancy rates across Australia

Separate data from CoreLogic shows that rental growth strengthened in May, rising another 1.0% over the month and 3.0% over the quarter:

Australian rental growth

Red hot rental growth.

Annual rental growth is now tracking at 8.8% across the combined capital cities and 10.8% across the combined regions.

Nicola Powell, Domain’s chief of research and economics, predicts that the rental market will tighten even further as immigration is rebooted, adding further cost-of-living pain for tenants:

The continued recovery and resurgence of the rental market sees demand exceeding supply two years from the onset of the pandemic, resulting in the overall decline seen in 2022 and could see lower vacancy rates remain in the coming months…

The current tightening of all of the cities’ rental markets will reduce choice, increase competition for rentals, and exacerbate less favourable rental conditions for tenants overall…

The rise in investor activity, the arrival of overseas migrants, and the return of international students will see rental demand remain elevated, worsening conditions for tenants.

Where will all the new migrants live if there aren’t enough homes for the existing resident population?

Australia’s tenants continue to be the forgotten victims of Australia’s broken housing market.

Unconventional Economist