Melbourne vacancy rates surge to 11.8% as city slickers flee

author-avatar By on February 03, 2021
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. 


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 27, 2021. View disclaimer.


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


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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