Renters to face less competition
While the national vacancy rate fell to a record low of 0.8% once again in January, the rental market may be shifting in favour of tenants, according to Domain’s latest Vacancy Rates Report.
With rental price increases slowing across most capital cities and average views per rental listing decreasing compared to the previous year, renters will likely see less competition, the report indicated.
In Sydney, the vacancy rate dropped to 0.9%, returning to its record low. This decline is attributed to a decrease in rental supply, particularly notable during the changeover period, accompanied by a surge in average views per rental listing, indicating growing demand. Nevertheless, views per rental listing have declined annually since mid-2023, hinting at a slowdown in rental demand.
Melbourne also saw its vacancy rate decrease to 0.9%, just 0.1 percentage points above its record low. This is the first monthly decline since September, driven by dwindling rental stock during the typical transition period. Despite a monthly increase in average views per rental listing, the yearly trend indicates a diminishing rental demand.
Brisbane experienced its first monthly decrease since September, with a vacancy rate of 0.8%, while Perth maintained a steady vacancy rate of 0.4%.
Adelaide emerged as the most competitive city for potential tenants, with a vacancy rate of 0.3%, just 0.1 percentage points from its record low. Darwin’s vacancy rate declined to 1.4%, supported by a decrease in rental stock and an increase in average views per rental listing.
Hobart witnessed a drop in vacancy rate to 0.7%, marking the lowest rate since February 2023 and a significant departure from its record high in June 2023. Canberra experienced the most substantial monthly change, with its vacancy rate decreasing to 1.5%, although conditions remain less competitive for tenants compared to other capitals.
“It was expected that the rental market would tighten in January as the increased demand absorbed December’s supply boost,” said Nicola Powell (pictured), chief of research and economics at Domain. “The glimmer of hope for renters this year does remain as we are likely moving into a period of slower rental growth and the number of prospective tenants per rental listing is easing. This suggests that rental demand is pulling back and while it hasn’t been enough to boost the vacancy rate, it could be on the horizon.
“We are also likely to see some renters transitioning to homeownership with the new first-home buyer incentives in place along with a potential interest cut that will improve borrowing capacity and mortgage affordability. We anticipate a tipping point to be reached at some stage this year, making a return to a more balanced rental market.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
