But demand continues to outpace supply
Australia's rental crisis is showing signs of easing as vacancy rates stabilise, although they remain at approximately half of pre-pandemic levels. The surge in demand from renters continues to surpass the available supply, according to the latest analysis conducted by PropTrack.
PropTrack's recently published report reveals that rental vacancy rates across the nation remained relatively steady in May, experiencing a marginal decrease of 0.01 percentage point to reach 1.42%. While this stabilisation brings some relief to renters under pressure and indicates a slight increase in available rental properties, the crisis is far from resolved, The Australian reported.
The study suggests that the rental market is cautiously indicating potential improvements throughout the remainder of 2023. However, finding suitable housing remains challenging, and rental prices are expected to continue their upward trajectory.
“Much-needed relief”
“The rental market seems to have stabilised, providing much-needed relief for renters,” said Paul Ryan, report author and PropTrack senior economist. “Capital cities have experienced a slight easing of rental market conditions in the past quarter, with vacancy rates increasing by 0.1 percentage points. This represents the most significant improvement in rental market conditions since the early stages of the pandemic in November 2020.”
Ryan further noted that these improvements have been observed across various markets, excluding Darwin, regional Queensland, and Western Australia, which still face challenging conditions for renters compared to three months ago.
“This easing of conditions is primarily driven by an increase in available rental properties following rapid rent increases,” he said.
Vacancies still low
Despite the recent improvements, rental vacancy rates remain low, still hovering at around half of pre-pandemic levels, making it difficult for individuals to secure rental properties nationwide, The Australian reported. Ryan emphasised that under these conditions, rents are expected to continue rising rapidly, exacerbating the financial strain on renters.
The surge in rental prices not only contributes to the cost of living crisis but also adds to the inflation rate, even as the Reserve Bank raises interest rates. With interest rates approaching their peak and limited options for buyers in the housing market, a separate chain of events is set in motion, potentially resulting in record-high house prices as early as January.
According to PropTrack, home prices are on track to report annual growth for the current financial year, following steady gains observed nationwide in the first five months of 2023. The impact of interest rate hikes appears to have diminished.
Regarding rentals, Sydney has started to experience some relief in rental market conditions, with vacancy rates increasing by 0.06 percentage points in May and 0.16 percentage points over the past three months. Melbourne's rental markets have also stabilized in recent months, albeit with a low level of available vacancies, standing at just 1.33%. Adelaide and Perth continue to face the tightest rental market conditions, with the lowest availability of rental properties, accounting for less than 1% of the market in these cities.
Have something to say about this story? Let us know in the comments below.
