The January downturn reversed the seasonal gains recorded in December when the vacancy rate eased 0.05 percentage points (ppt) to 1.12%. 

Sydney and other cities drove the decline after the level of vacant homes across capital cities nosedived by 0.8 ppt to reach 1.08%.

Renters in the NSW capital witnessed the sharpest drop at 0.19 ppt, leaving the vacancy rate at 1.20% in the first month of 2024.  

It was also much harder to find properties available for rent in Melbourne (down 0.04 ppt to 1.15%), Brisbane (down 0.06 ppt to 0.86%), Canberra (down 0.06 ppt to 1.66%), and Hobart (down 0.03 ppt to 1.00%). 

Despite conditions easing in Adelaide (up 0.09 ppt) and Perth (up 0.02 ppt), both capital cities continued to experience the tightest rental market conditions at 0.78% and 0.76%, respectively. 

At 2.69%, Darwin remained the sole capital where supply meets demand.

A vacancy rate of 2-3% is considered a healthy market where supply matches demand. 

“Vacancy across the combined capital city areas was at the second lowest level on record in January, driven by a particularly sharp drop in availability in Sydney,” PropTrack economist Anne Flaherty said.

According to Ms Flaherty, the share of rental properties sitting vacant has been trending down for three years, from 3% in April 2020 to 1.09% in January.

“There are now 54% fewer homes sitting vacant compared to the onset of the pandemic.”

Tenants looking for homes might have better chances in regional areas, as the vacancy rate in the regions rose 0.04 ppt to 1.10% in January. 

“With few rental properties currently vacant, tenants are facing stiff competition,” Ms Flaherty said. 

“This is likely to drive rents higher over the course of 2024, though we expect the pace of growth to slow.” 

Vacancy rate at all-time lows

Today’s PropTrack data came at the heels of Domain’s January vacancy rate report, which found Australia’s rental supply returned to a record low.

According to Domain, the vacancy rate throughout the country tightened to 0.8% in January as the increased demand absorbed the December supply boost. 

“While it is unlikely that asking rents will fall given the vacancy rate remains stubbornly low, we are likely moving into a period of slower rental growth,” Domain chief of research Dr Nicola Powell said. 

  • Sydney’s vacancy rate fell to a record low of 0.9%, as rental supply plunged in January.
  • Melbourne’s vacancy rate dropped for the first time since September, leaving it at 0.9% on the back of a surge in activity during the changeover period.
  • Brisbane saw its first monthly decline since September, falling to 0.8%.
  • Perth’s vacancy rate remained stubbornly tight at 0.4%.
  • Adelaide was the most competitive city for potential tenants as its vacancy rate plunged 0.3%.
  • Canberra’s vacancy rate sank 1.5%, the largest change among the capitals.
  • Darwin had the second highest drop, falling 1.4% in January.
  • Hobart’s vacancy rate fell to 0.7%, its lowest since February 2023. 

Better conditions on the horizon

Despite the gap between supply and demand remaining tight, Dr Powell said lower annual average views per rental listing indicated easing competition among renters. 

“This supports the trend of slower rental growth, suggesting rental demand is pulling back and while it hasn’t been enough to boost the vacancy rate, it could be on the horizon,” she said.

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