National Vacancy Rates rise to 1.4%

According to SQM Research residential dwelling vacancy rates in Australia rose to 1.4% in November 2024. The total number of rental vacancies increased to 41,894 residential properties, up from 36,486 in October. The rise was driven by higher vacancy rates in Sydney, Melbourne, and Brisbane, while other cities recorded stable or minimal changes.

Sydney’s rental vacancy rate climbed to 1.8%, with 13,093 rental dwellings now vacant. Melbourne also saw an increase, with its vacancy rate reaching 2.0%, representing 10,755 vacant dwellings. Brisbane recorded a modest rise to 1.1%, with 3,918 properties now available for rent.

Canberra maintained one of the highest rental vacancy rates among the capital cities at 1.7%, unchanged from October. Perth continued to exhibit strong demand, with its vacancy rate holding at a low 0.6%. Darwin’s vacancy rate rose to 1.6% as the region enters its seasonal lull, while Adelaide and Hobart remained steady at 0.7%.

Vacancy rates in the CBDs recorded subtle shifts, with Sydney’s CBD vacancy rate rising up from 4.7% to 6.4% same as Melbourne’s CBD witnessed a rise from 5.5% to 5.9%. Brisbane’s CBD this month also recorded a minor raise from 2.3% to 2.4%.

Rents

Over the past month leading up to 12 December 2024, rental prices across Australia’s capital city asking rents showed varied trends.

In Sydney, combined rents decreased by 0.9% to $830 a week, reflecting a softening in rental demand. Melbourne saw a modest rise of 0.3%, with combined rents now at $629, driven primarily by an increase in house rents. Brisbane recorded a notable increase of 0.8%, with combined rents reaching $663, signalling continued demand in the market.

Perth stood out with a significant rise of 2.3% in combined rents, now at $732 a week, marking strong growth across both houses and units. Adelaide experienced a smaller gain, with combined rents rising by 0.1% to $610, showing steady market conditions. Canberra’s rental market also saw robust growth, with combined rents increasing by 0.9% to $661, driven by higher demand for houses and units.

Darwin showed strong rental demand, with combined rents increasing by 2.7% to $618. Hobart followed suit, with combined rents rising by 2.0% to $516 a week, supported by a sharp increase in unit rents.

Nationally, combined rents fell slightly by 0.5% to $631 a week, while the capital city average remained unchanged at $722, reflecting the mixed rental market conditions across the country.

Louis Christopher, Managing Director of SQM Research said:

“National rental vacancy rates have hit a three-year high with the vacancy rate reaching 1.4%. Now at this time of year, we normally record a seasonal increase in vacancies driven in part by university graduates completing their courses for the year and returning home and so the rise is in part due to seasonality. But there are also other factors that drove vacancies higher in November.

Melbourne for example has risen back to 2% which is getting close to a market in equilibrium. Sydney is now back at 1.8%. While we still have rental shortages in our two largest capital cities, the situation has clearly improved from the very difficult days of 2021 to 2023. I think this is mainly due to the number of occupiers increasing per property. Sky high rents have forced many to make compromises in their living arrangements.

Are we out of the rental crisis? No, not yet but there is a little bit of light at the end of the tunnel, notwithstanding another year of rapidly expanding population compared to our low building rate will keep the pressure on tenants in 2025.”