Melbourne vacancy rates surge to 11.8% as city slickers flee

Rental markets in regional Australia have become increasingly competitive with supply drying up as city dwellers escape Melbourne and Sydney.

According to Domain, vacancy rates in inner-city Melbourne are at new record highs of 11.8%, as the city's rental market continues to feel the effects of prolonged COVD-19 lockdowns.

Melbourne's vacancy rate has now more than doubled compared to the same time last year at 4.6% in January - the highest of all the capitals according to Domain rental vacancy data released today.

The estimated number of vacant rentals in Melbourne has risen an astonishing 157.3% year-on-year, at just under 26,500 empty rentals. 

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Domain's Senior Research Analyst Dr Nicola Powell said inner-city areas continue to have the highest vacancy rates.

"Renters may have the best chance of finding a new home in the Victorian suburbs of Whitehorse (West), Stonnington (East & West) and Melbourne City as these saw the highest rise in properties available for rent," Dr Powell said. 

Highest vacancy rates across greater capital city areas – January 2021
Rank	Sydney	Melbourne	Brisbane & Gold Coast	Perth	Adelaide
1	Parramatta, 4.8%	Melbourne City, 11.8%	Brisbane – Inner, 4.3%	Perth City, 1.4%	Adelaide City, 5.0%
2	Auburn, 4.2%	Stonnington – West, 8.3%	Sherwood – Indooroopilly, 4.3%	Cottesloe – Claremont, 1.1%	Holdfast Bay, 0.8%
3	Strathfield – Burwood – Ashfield, 4.1%	Stonnington – East, 8.1%	Brisbane Inner West, 3.6%	South Perth, 1.1%	Norwood – Payneham – St Peters, 0.8%
4	Pennant Hills – Epping, 3.8%	Whitehorse – West, 7.6%	Nathan, 2.7%	Canning, 1.0%	Prospect – Walkerville, 0.7%
5	Hornsby, 3.8%	Boroondara, 6.5%	Mt Gravatt, 2.5%	Belmont -Victoria Park, 0.8%	Burnside, 0.6%

Source: Domain

Meanwhile, the rental market in Sydney has remained fairly flat over the year to end-January with a vacancy rate of 2.9% - the second highest of all the capital cities. 

"Strong exposure to international border closures in Melbourne and Sydney will ensure significantly less demand for rentals for the foreseeable future, at least until international border restrictions are lifted," Dr Powell said.

The areas with the biggest rise in rental vacancies were Strathfield-Burwood-Ashfield, Kogarah- Rockdale, Auburn, Marrickville-Sydenham-Petersham and Eastern Suburbs-South.

Sydney-siders looking for a rental would have the most luck in Parramatta, with vacancy rates of nearly 5%. 

See also: The rise of regional property in COVID-19

During the September quarter, a net 7,782 people left Sydney with three fifths of those moving to a regional part of NSW, according to the latest data from the Australian Bureau of Statistics (ABS).

Melbourne lost a net of 7,445 residents while the combined capital cities had a net loss of 11,200 people to regional areas - the biggest quarterly net loss on record.

The exodus from the capital cities to regional areas can also be seen in the Domain data. Nationally, vacancy rates slipped to 1.9% in January - the lowest vacancy rate since March 2020 just before the pandemic.

Capital city rental vacancy rates – January 2021
City	Jan-21	Dec-20	Jan-20	Monthly change	Annual change
Sydney	2.9%	3.9%	2.9%	↓	–
Melbourne	4.6%	5.4%	1.9%	↓	↑
Brisbane	1.6%	1.9%	2.3%	↓	↓
Perth	0.7%	0.9%	2.4%	↓	↓
Adelaide	0.6%	0.7%	0.9%	↓	↓
Hobart	0.4%	0.5%	0.6%	↓	↓
Canberra	0.9%	1.4%	1.6%	↓	↓
Darwin	0.8%	1.1%	4.2%	↓	↓
National	1.9%	2.4%	2.0%	↓	↓

Source: Domain 

Dr Powell said it's pretty normal to see these kinds of figures at the start of a New Year.

"It is typical for the rental market to tighten in January following a seasonal boost of supply over December," she said. 

"The end of the year marks the rental changeover period, as leases expire and choice lifts, before strong rental demand in January significantly reduces vacant rental listings in anticipation for the new year."

City slickers looking for a tree or sea change will have to battle it out for a rental property: the most tightly held regions in Australia continue to be scattered across smaller capital cities and lifestyle regions.

Lowest  vacancy rates across capital city areas – January 2021
Rank	Sydney	Melbourne	Brisbane & Gold Coast	Perth	Adelaide
1	Wyong, 0.3%	Mornington Peninsula, 0.3%	Nerang, 0.2%	Wanneroo, 0.2%	Marion, 0.2%
2	Camden, 0.3%	Yarra Ranges, 0.4%	Coolangatta, 0.2%	Kwinana, 0.3%	Port Adelaide – East, 0.2%
3	Gosford, 0.4%	Cardinia, 0.5%	Caboolture Hinterland, 0.3%	Stirling, 0.4%	Gawler – Two Wells, 0.2%
4	Blue Mountains, 0.5%	Nillumbik – Kinglake, 0.5%	Broadbeach – Burleigh, 0.3%	Swan, 0.4%	Tea Tree Gully, 0.2%
5	Richmond – Windsor, 0.6%	Casey – South, 0.7%	Strathpine, 0.4%	Gosnells, 0.4%	Playford, 0.3

Source: Domain

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