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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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."
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.
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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