National vacancy rate falls in April, now below pre-pandemic levels

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on May 04, 2021
National vacancy rate falls in April, now below pre-pandemic levels

After three steady months, the national vacancy rate fell to 1.8% in April from 1.9% in March, according to Domain.

The rate now sits below pre-pandemic levels at its lowest level since March 2020, shortly before lockdowns were implemented and international borders shut. 

Domain noted it was difficult to compare the April data with the same period last year, given the effect the virus had on the rental market.


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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 August 7, 2022. View disclaimer.

Domain senior research analyst Dr Nicola Powell said April was another month of mixed results for the capital cities. 

"Vacancy rates in Melbourne and Sydney tightened, while Perth, Hobart and Canberra lifted marginally. Brisbane, Adelaide and Darwin held steady at multi-year lows," Dr Powell said.

"Compared with April 2020, vacancy rates in all capital cities are lower, except Melbourne, and Melbourne’s rental market has been affected by two lockdowns in 2020 that resulted in the vacancy rate bouncing twice, the second time higher than the first.

"The sustained low vacancy rates across the smaller capitals outside Melbourne and Sydney mean conditions will remain tight for tenants, but a welcome boost for landlords." 

Highest vacancy rates across capital city areas
April 2021
Rank
Sydney Melbourne Brisbane & Gold Coast Perth Adelaide
1 Auburn (4.8%) Melbourne City (10.2%) Brisbane Inner (3.8%) Perth City (1.6%) Adelaide City (4.6%)
2 Parramatta (4.8%) Stonnington – East (7.8%) Sherwood – Indooroopilly (2.8%) Cottesloe – Claremont (1.5%) Holdfast Bay (1%)
3 Strathfield – Burwood – Ashfield (4%) Whitehorse – West (6.9%) Brisbane Inner – West (2.7%) South Perth (1.1%) Norwood – Payneham – St Peters (0.9%)
4 Canterbury (3.8%) Stonnington – West (6.7%) Nathan (2.3%) Melville (1%) Prospect – Walkerville (0.8%)
5 Botany (3.5%) Boroondara (6%) Mt Gravatt (2%) Belmont – Victoria Park (0.9%) Unley (0.7%)
Source: Domain
The vacancy rate represents the portion of available, empty rental properties relative to the total stock of rental property. The rental vacancy rate is based on adjusted Domain rental listings and will be subject to slight revisions over time.

The Domain report found strong annual growth in median rents in the March quarter across houses and units in the smaller capitals, largely driven by strong competition among renters putting pressure on asking rents. 

Melbourne's vacancy rate remained high but fell to 4.2%, the greatest fall of any capital and significantly lower than its December peak of 5.4%. 

There were just over 24,000 estimated vacant rental listings across Melbourne at the end of April, a fall of 7% from last month.

In Sydney, the vacancy rate declined to 2.9%, as 5% fewer rental listings were estimated to be vacant at the end of April compared with March.

Lowest vacancy rates across capital city areas
April 2021
Rank
Sydney Melbourne Brisbane & Gold Coast Perth Adelaide
1 Camden (0.3%) Mornington Peninsula (0.4%) Capalaba (0.2%) Wanneroo (0.3%) Tea Tree Gully (0.2%)
2 Wyong (0.4%) Yarra Ranges (0.5%) Caboolture Hinterland (0.2%) Kwinana (0.4%) Marion (0.2%)
3 Gosford (0.5%) Nillumbik – Kinglake (0.5%) Nerang (0.3%) Stirling (0.4%) Port Adelaide – East (0.2%)
4 Blue Mountains (0.5%) Cardinia (0.5%) Gold Coast Hinterland (0.3%) Rockingham (0.5%) Playford (0.2%)
5 Sutherland – Menai – Heathcote (0.7%) Macedon Ranges (0.7%) Coolangatta (0.4%) Kalamunda (0.5%) Gawler – Two Wells (0.3%)
Source: Domain
The vacancy rate represents the portion of available, empty rental properties relative to the total stock of rental property. The rental vacancy rate is based on adjusted Domain rental listings and will be subject to slight revisions over time.

Sydney and Melbourne rental markets improving

Dr Powell said rental conditions in the nation's two biggest capitals were quickly changing, with conditions improving for landlords as vacant listings fell considerably in April. 

"In Melbourne, the vast majority of regions recorded a decline in vacant rental listings (73% of Melbourne SA3 regions)," she said. 

"This was similar in Sydney, with about 70% of the SA3 regions recording a fall in vacant rental listings.

"Melbourne and Sydney regions dominated the top 20 areas with a fall in estimated vacant rental listings over April." 

Dr Powell said the data showed there was plenty of reason for optimism for inner-city rental markets. 

"In fact, the regions with the largest fall in rental listings are largely situated within inner-city regions and close to universities with a large concentration of apartments and share houses. A sign that people may in fact be returning to our cities." 

Home values lifted by 1.8% in April, according to CoreLogic, after March saw a 2.8% increase, the fastest monthly pace of gains in 32 years. 

Melbourne and Sydney continued to have some of the weakest rental conditions, and head of research at CoreLogic Tim Lawless said this was due to larger exposure to tenancy demand shocks from stalled overseas migration. 

“Prior to COVID, Melbourne and Sydney accounted for around three quarters of overseas migrants into the capital cities," Mr Lawless said.

"With international borders remaining closed, rental demand in these cities, and in particular their unit market, has been materially impacted.”


Photo by John Elfes on Unsplash

 



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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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