Residential rents are tipped to rise sharply in the coming months after vacant listings fell in May to their lowest levels on record across the combined capitals, data from Domain shows.
Nicola Powell, Domain’s chief of research and economics said the drop in the supply and availability of rentals – with Melbourne posting the biggest decline of 8.5 per cent – would drive rental prices higher and increase competition for prospective 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,” she said.
“The current conditions bolster the likelihood of future rent increases and could see lower vacancy rates remain in the coming months.”
Across the combined capitals, rental stock dropped by 5.4 per cent to 19,715 to its lowest level on Domain’s record, while the rest of the cities posted a modest rise in listings during the same period.
Melbourne’s monthly decline cut its total rental stock listings to 8244. Over the past 12 months, the number of available rental properties has plummeted by 53.8 per cent in the Victorian capital, the sharpest decline across all capital cities.
Sydney’s vacant rental properties fell 3.3 per cent to 7979, pulling total listings down 46.3 per cent from a year earlier.
“The reduced choice in rentals has resulted in tightening conditions that continued to favour landlords and increased the likelihood of rental price rises after the reduction in rental prices seen during COVID-19,” Dr Powell said.
Rental listings fell by 4.8 per cent to a record low of 1582 in Brisbane, putting them down 47.4 per cent year on year.
Rental listings fell 4.1 per cent to 1086 in Perth, were down 5.4 per cent in Hobart and was down by 7.3 per cent in the ACT. By contrast, Darwin lifted by 21 per cent.
Rental listings fell 49.5 per cent year on year in Adelaide.
The market, which showed a combined capital vacancy rate of 1 per cent, was likely to tighten further, Dr Powell said.
“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,” she said.
Vacancy rate in Sydney stayed tight at 1.4 per cent, its lowest vacancy rate in Domain’s record. Brisbane fell by 10 basis points to a record low of 0.6 per cent and by a similar amount to 1.6 per cent in Melbourne.
Adelaide was the most competitive capital city to find a rental, with vacancy rates sitting at just 0.3 per cent. All the remaining capitals posted vacancy rates below 1 per cent.
In the past 12 months to March, house rents in Sydney have jumped by 9.1 per cent to a record $600 per week, to its largest annual increase in 13 years.
Median house rents in Melbourne rose by 3.4 per cent, Brisbane by 14.9 per cent, Adelaide by 9.4 per cent, and Canberra by 16.7 per cent.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/rents-set-to-soar-as-vacancies-fall-to-record-low-levels-20220602-p5aqkr