Australia's vacancy rate holds at record low in October – Domain

Australia's housing market continues to present significant challenges for tenants as the national vacancy rate remains at a record-low 0.8% for the second consecutive month in October, according to Domain's latest Vacancy Rates Report.

While some cities have seen marginal improvements, the overall situation is intensely competitive for renters.

“The vacancy rate has held at this record low for the second consecutive month, with strong overseas migration and higher property prices pressurising demand at a time rental properties are chronically undersupplied,” said Nicola Powell (pictured above), Domain’s chief of research and economics.

“Dwindling rental stock has visibly suffered because of a lack of investor activity, ongoing development undersupply, and higher construction costs.” 

With the changeover season fast approaching, the persistence of this low vacancy rate raises concerns for tenants. Limited options, fierce competition, and the potential for higher rent costs add to the stress during the transition period and weaken tenants’ bargaining power. Despite the expected seasonal increase in rental supply in the coming months, the situation is shaping up to be one of the most challenging peak changeover periods for renters.

Nationally, the number of vacant rental listings is at an all-time low, except for Darwin. To achieve a healthier vacancy rate of 2-3%, an additional 40,000 to 70,000 rentals are required to rebalance the market.

Here's a snapshot of the vacancy rates in major Australian cities:

• Sydney, one of the most impacted by overseas migration, sees its vacancy rate holding steady at a record low of 0.9%, primarily due to a historic shortage in rental supply.
• Melbourne's vacancy rate is also steady at 0.9%, just 0.1 percentage point off the record low seen in March, driven by a severe lack of rental supply.
• Brisbane is one of the two cities that saw a rise in vacancy rates, sitting at 0.8%, indicating a stabilisation in the rental market compared to previous highly competitive conditions.
• Perth, one of the most competitive cities for potential renters, has a vacancy rate that remains at a record low of 0.3%.
• Adelaide, another highly competitive city, maintains a vacancy rate of 0.3% for the third consecutive month.
• Darwin’s vacancy rate has surged to 1.2%, the highest monthly change among capital cities, and now ranks as the second-highest vacancy rate.
• Hobart's vacancy rate has declined for the fourth consecutive month to 0.9%, making it the third-highest vacancy rate among the capitals.
• Canberra's vacancy rate is stable at 1.6%, the highest among all capital cities, but it remains less competitive for tenants compared to other cities.

“While there is no quick fix to address affordability challenges, it is crucial that we implement policies that encourage investors to enter the market,” Powell said.

Visit the Domain website to access and read the full report.

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