Rental vacancy rates rise across the country, SQM figures show

The numbers also come just weeks after similar research from SQM found national stock levels of property has increased by 68% over the past year – and doubled in Melbourne.

The new figures show national vacancies rose from 1.6% in March 2011 to 1.8% in April. Vacancies have risen 1.4% over the last year.

The highest vacancy rates were found in Melbourne at 2.5%, followed by Darwin at 1.8%, Hobart at 1.7% and Adelaide and Sydney at 1.4% each.

Overall, there are 47,787 properties vacant, up by 6,135 compared to last month and by 10,177 over the past year.

And while the data may show that vacancies are increasing, SQM managing director Louis Christopher says the signs aren't so good for renters, who are already stuck in a tight market.

He argues that as interest rate increases loom over the heads of prospective buyers, they opt to remain renters and don't free up enough stock.

"SQM's rental vacancy rates highlight the endemic problem of the various rental markets around the country. There really is a shortage of rental accommodation for a number of areas," he said.

"I fail to see how this problem is going to be rectified anytime soon. The current housing downturn only aggravates this problem as many would-be home buyers hold off and rent for longer durations."

But Andrew Wilson, economist for Australian Property Monitors, says the news gels with what his firm is seeing and takes an optimistic view.

"There are signs that vacancy rates in Melbourne are probably the softest in the country. Affordability constraints in several cities have softened buyer demand, and the other option is the rental market. In Sydney there is a shortage, and strong demand there for rental properties."

"Melbourne is probably the best position for renters at the moment. These figures would certainly gel with our data. Melbourne has the highest number of properties on the market, and stock up for sale is growing as well."

"I guess it's a good sign that we may get stabilisation or adjustment going forward in terms of Melbourne housing prices, and we're certainly seeing that in the rental side as well. We have new stock coming through, which will help on the supply side."

• Auctions market slumps as euro crisis affects buyer confidence
• Why the regions will offer better returns than the cities for property investors: Ryder
• ABS figures show Australia's housing price bubble is bursting: Steve Keen
• Why house prices slumped in the second half of April: Joye
• Inside Australia's housing shortage myth: Ryder

...
written by NoGreaterFools, May 20, 2011

When (not if) property prices do plunge 20-50% those new investors will be able to offer a more competitive rent thus driving rents down across the board. This is probably already happening.

...
written by connaust, May 20, 2011

International student new commencements (not churning onshore enrolments) are heading down by maybe 50%, hitting Melbourne institutions very hard (would not be surprised to see not just more private colleges closing, but unis and TAFE going to government with hats in hand to make up shortfalls in income), plus many graduates etc. on PR bridging visas in backlog will need to depart, and less family dependents equals population and growth stagnating....

I saw first hand results late 2011 in Melbourne, new students finding house rental first attempt in inner city (Preston, and negotiating asking rent down), and Newport international movers' vans loading up as students depart.....

So if you are a leveraged property investor and think you can maintain high rental rate while sitting on vacant property, good luck.