Melbourne and Sydney Unit Vacancies Now Falling as Rental Markets Tighten.

Home rental markets have continued to tighten over April with clear trends now emerging of a sustained reduction in the record-high vacancies of Sydney and Melbourne inner-suburban and CBD apartments reported over the past year.

Unit rental vacancy rates however continue to track higher than the rates for houses reflecting recent rising demand from tenants for larger, outer-suburban homes.

Tight and falling house vacancy rates were reported in all capitals over April with the exception of Melbourne that recorded the highest result and a rising trend – likely impacted by an ongoing exodus of interstate coronavirus migrants.

Most capitals are now recording vacancy rates at or below 1.0% for houses reflecting emerging chronic housing shortages. Although vacancy rates for units remain higher than houses generally, the trend continues to decline in all capitals with the exception of Darwin – that nonetheless again reported the lowest capital city rate.

Rental Vacancy Rates April 2021

Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
Darwin
Canberra

House
2.0%
2.3%
1.0%
0.7%
1.1%
0.8%
0.8%
0.4%

Unit
4.4%
5.9%
2.1%
1.4%
1.5%
1.9%
1.0%
1.2%

Total Homes
3.3%
3.8%
1.5%
0.9%
1.2%
1.1%
0.9%
0.7%

Although unit rents in Melbourne and Sydney have fallen sharply over the past year, vacancy rates have declined markedly over the past month.

This reduction is likely impacted by sharply increased demand for inner-city holiday and business accommodation as interstate border restrictions have eased and short-term rentals have transferred out of the permanent market that it flooded over the past year.

Rental Vacancy Rates Trend April 2021

Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
Darwin
Canberra

House
↓
↑
↓
↓
↓
↓
↑
↓

Unit
↓
↓
↓
↓
↓
↓
↑
↓

Total Homes
↓
↓
↓
↓
↓
↓
↑
↓

Shortages in rental accommodation have translated into sharp increases in rents over the past year for both houses and units in all capitals with the exception of Melbourne and Sydney.

Canberra remains clearly the most expensive capital for house and unit rents with Brisbane, Adelaide, and Perth all recording strong annual rental increases for both houses and units.

Median Weekly Asking Rents April 2021

Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
Darwin
Canberra

House
$500
$430
$420
$430
$450
$500
$620
$640

Annual Change
-2.0%
-2.3%
5.0%
7.5%
21.6%
3.1%
24.5%
6.7%

Unit
$450
$370
$420
$370
$400
$420
$400
$510

Annual Change
-10.0%
-16.9%
10.5%
8.8%
5.3%
-0.7%
0.0%
4.1%

Already undersupplied rental markets are likely to continue to tighten with upward pressure on rents continuing as first home buyer activity is set to ease from current strong levels adding to demand for tenancies.

Ongoing chronically low levels of investors will also continue to constrain rental markets on the supply-side exacerbated by the underbuilding of recent years.

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Read more: propertyupdate.com.au