Renters spoilt for choice in Sydney and Melbourne as vacancy rates surge

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on December 02, 2020
Renters spoilt for choice in Sydney and Melbourne as vacancy rates surge

Rental vacancy rates continued to climb in Sydney and Melbourne in November, presenting an opportunity for renters to negotiate and save on rent.

Domain rental vacancy rate data released on Wednesday shows vacancy rates are the highest in apartment-heavy inner Melbourne and Sydney, with vacancy rates as high as 14.4% in Melbourne City.

Melbourne's overall vacancy rate rose to 4.8% in November, from 4.7% a month earlier. This marks the highest rental vacancy rate in the country and comes after the city emerged from the toughest COVID-19 lockdowns in Australia.

Sydney's overall vacancy rate rose to 3.4% in November from 3.3% the month before, while Brisbane's rental vacancy rate fell slightly to 1.9%. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable 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
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 26, 2022. View disclaimer.

Domain's Senior Research Analyst Dr Nicola Powell said the inner-city areas of Melbourne, Sydney, Brisbane and Adelaide continue to be rental weak points. 

"These are areas that have a high level of overseas migration and student population, with a significant proportion of the rental demand sourced from overseas," Dr Powell said. 

"These are also areas that have a greater exposure to the industries most vulnerable to the job losses associated with the pandemic."

Renters in Sydney are spoilt for choice, with an estimated 21,800 vacant rental listings at the end of November – up 3.9% from October.

In Melbourne, over 27,000 rentals became available by the end of November, despite the complete elimination of COVID and a significant reopening of the Victorian economy over November. 

See also: Now that it's a renters market, should you take advantage and find a new rental?

"The effects of the pandemic have decimated Melbourne’s inner city market," Dr Powell said.

"The number of vacant rentals soared in Melbourne during stage four lockdowns and continued to rise as restrictions began to ease.

"The more substantial lift in vacant Sydney rentals is likely due to the seasonal influence as the rental market edges closer to the typical tenant changeover period. This seasonal effect may not be as pronounced in Melbourne given the recent COVID-19-induced rental hiatus."

The sharpest rise in vacant rental listings came from inner-city Melbourne, including the regions of Stonnington – West, Whitehorse – West, Boroondara, Brunswick – Coburg and Port Phillip. 

Capital city rental vacancy rates – November 2020

Nov-20 Oct-20 Nov-19 Monthly change Annual change
Sydney 3.4% 3.3% 2.9%
Melbourne 4.8% 4.7% 1.8%
Brisbane 1.9% 2.0% 2.3%
Perth 0.8% 0.8% 2.2%
Adelaide 0.8% 0.7% 1.0%
Hobart 0.5% 0.6% 0.5%
Canberra 0.7% 0.9% 1.3%
Darwin 0.9% 0.7% 4.8%
National  2.1%  2.1% 1.9%

In other parts of the nation, it's a different story altogether.

Hobart and parts of South Australia have some of the lowest vacancy rates in the country as people flee the capital cities.

"The pandemic has brought upon an abundance of demand for people seeking greater space and laidback lifestyle, as working from home becomes more accepted in our workplaces," Ms Powell said.

"This is likely to place rental demand across lifestyle regions close to the water, tree-change regional areas and on the outskirts of the capital cities."

Hobart's overall vacancy rate fell to 0.5% with some parts of the city recording vacancy rates as low as 0.1%. 

If you're looking for a rental in South Australia's Marion and Tea Tree Gully you won't have much to choose from, with a vacancy rate of just 0.2%.

Renting nearly impossible for those on JobSeeker

Despite rental affordability looking good overall in some cities, for Australia's poorest it's a different story. 

While the JobSeeker supplement has slightly improved rental affordability for Newstart households, recipients are still facing moderate to extreme rental stress nationwide, according to the Rental Affordability Index (RAI) released yesterday

Despite rents falling and vacancies rising, the index found rental affordability has worsened for about 755,000 new JobSeeker recipients who are spending between 42% to 69% of their incomes on rent in every capital city.

According to the research, a single person on JobSeeker could not afford to rent in a single place across the whole country. 

“As the Victorian Government has now done, there is a massive need for government investment in social and affordable housing – and now is the time for it since borrowing costs are so low in Australia, National Shelter Executive Officer Adrian Pisarski said. 

"Without investment in this space, we are ignoring our responsibility to help people be decently housed."


Photo by Soheb Zaidi on Unsplash

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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