Sydney rental vacancy rate climbs to highest since 2005

Photo by Kewal on Unsplash

The number of rental properties sitting vacant in Sydney have continued to surge, new figures show, putting pressure on landlords to cut rental prices.

Almost one in six rental properties in Sydney's CBD (16.2%) were vacant in May.

Sydney's residential vacancy rate is now the highest in the country and the highest on record since 2005, according to SQM research, rising to 4% in May. 

There are now over 29,416 rental properties sitting empty across Sydney - the result of a decline in international students and holidaymakers with Airbnb rentals becoming available on longer-term leases. 

Melbourne's vacancy rate also increased to 3.1% in May, while Canberra jumped by 0.1% to 1.3%.

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Despite the spike in vacancy rates in Sydney and Melbourne, the national vacancy rate has actually slipped.

The national vacancy rate fell marginally from 2.6% in April to 2.5% in May. 

Adelaide (1.2%), Hobart (1.2%) and Brisbane (2.5%) dragged down the national vacancy rate.

See also: Should you find a new place to rent during COVID-19?

SQM Managing Director Louis Christopher said we may now be hitting a short-term peak in vacancies. 

"Weekly rental listings suggest a slight decline in supply for the first half of June. I think what is happening here is AirBnb property owners have now pulled back from listing long term and are now waiting this time out in the hope that the borders will be open shortly," Mr Christopher said. 

"However, with an expected 170,000 dwelling completions for this year and still no imminent opening of the international border, I still think rental vacancy rates are going to remain elevated for 2020.

"While First Home buyer grants may assist in soaking up some of the new supply, let's just remember the bulk of underlying demand growth in recent years has come from net migration. Also note that many first home buyers are tenants."

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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): Credit Union Australia, 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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