The situation facing Australian renters continues to darken.
Domain’s latest rental vacancy data shows that the national vacancy rate hit another record low of just 0.7% in February:
Source: Domain
Sydney’s and Melbourne’s rental vacancy rates fell to a record low of 0.8%, according to Domain.
Brisbane’s rental vacancy rate fell for the second straight month to 0.7% and is just 0.1 percentage point off its record low.
Both Perth’s and Adelaide’s vacancy rates are only 0.3%. Perth’s is at a record low, whereas Adelaide’s is just 0.1 percentage points off its all-time low, according to Domain.
Domain noted that the collapse in rental vacancy rates has been “driven by ongoing factors, including rapid population growth, a sluggish construction sector, and escalating property prices”.
Anne Flaherty, economist at PropTrack, warned that the rental situation could get worse before it improves.
“Conditions are really tough for renters at the moment”, Flaherty told AAP.
“The fact that the population is growing, that the supply of new housing is slowing – what this implies is that we’re not going to see a change in these conditions any time soon”.
“I think it could get worse than it is at the moment”, she said.
That is a fair assessment by Flaherty. All forward indicators for dwelling construction – approvals, commencements, and completions – have collapsed to decade lows at the same time as population growth has surged:
As a result, the housing shortage will inevitably worsen, keeping rental vacancy rates low and rental inflation high.
Tenants will continue to respond by living at home for longer, moving into shared housing, or becoming homeless.
The easiest way to solve the issue and break the cycle is to lower net overseas migration to a level that is below the nation’s ability to supply housing and infrastructure.
Otherwise, Australia’s rental crisis will become a permanent feature.
