Melbourne Vacancy Rate Plummets During February

Melbourne has recorded its lowest vacancy rate since May 2011

Figures released by SQM Research this week have revealed that the national residential vacancy rate decreased even further during February.

National vacancies dipped 0.1 percentage points to 2.1 per cent and 60,330 vacancies.

Year-on-year, vacancies have still risen by 0.3 percentage points, with the country experiencing a substantially looser rental market than this time last year.

“Overall rental conditions continued to modestly favour landlords over the course of the month…”

Of particular interest this month is Melbourne’s vacancy rate figures, with the capital city calling 0.5 percentage points during February to reveal a vacancy rate of 2.4 per cent – the lowest vacancy rate recorded for Melbourne since May 2011.

The general trend has been downward for many regions in Melbourne such as eastern Melbourne, inner eastern Melbourne, Melbourne north and Melbourne west.

We note the Melbourne CBD did too record a fall for the month, but its figures are still up from this time last year and we continue to retain our warning about CBD vacancy rates.

Asking Rents Index

SQM Research’s Asking Rents Index revealed that asking prices for rental properties continued to record mixed stories during February, with the capital city average revealing a -0.7 per cent decrease in asking rents for houses and a 1.2 per cent increase in asking rents for units since February 2013.

Sydney was the outperformer of the capital cities over the year with a 2.3 per cent increase in asking rents for houses and a 3.6 per cent increase in asking rents for units on a yearly basis.

“The general trend has been downward for many regions in Melbourne…”

However, Canberra and Perth recorded the steep declines with Canberra revealing a -7.6 per cent decrease in asking rents for houses and a -5.5 per cent decrease in asking rents for units.

Perth has recorded a -10.7 per cent decrease in asking rents for houses and a -7.4 per cent decrease in asking rents for units since February 2013.

The Decrease Explained

The decreases in asking rental prices for each of these capital cities can be explained simply – for Canberra, the government job cuts in the city have seen an exodus of residents from the area; and for Perth – the downturn in the mining boom has caused a decrease in demand for rental dwellings in the area.

Overall rental conditions continued to modestly favour landlords over the course of the month, with some interesting results coming out of Melbourne and Perth.

“Sydney was the outperformer of the capital cities over the year…”

It has been some time since we recorded a definitive decline in vacancies in what could be a sign that the excess stock seen in Melbourne is starting to be occupied.

Meanwhile, the sharp falls in rents for Perth are in line with rising vacancies being recorded there. They are a manifestation of a rather rapid decline in demand for accommodation.