Melbourne vacancy rates surge to 11.8% as city slickers flee

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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. 


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Lender

Variable
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UNLIMITED REDRAWSSPECIAL OFFER
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Variable
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AN EASY DIGITAL APPLICATION
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Variable
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100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
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Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
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Variable
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NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
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Variable Home Loan (Principal and Interest)

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 25, 2022. 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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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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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