Australia is on the verge of a “rental crisis” with the national vacancy rate continuing to fall and now sitting at a tiny 1.1 per cent — the lowest in several years.
Domain, which has been keeping records since 2017, said the rental market continued to favour landlords rather than tenants, with vacant listings dropping across all capital cities.
“Australia is on the verge of a rental crisis, as rental demand will continue to sharply rebound following the full reopening of international borders to double-vaccinated visa holders and tourists, following two years of closures,” Domain said in its latest report.
“The staged approach to borders reopening will have contributed to the drop in vacancy rates in recent months.”
A resurgence in rental demand will be largely experienced in Sydney and Melbourne, which both saw the biggest vacancy drops last month.
“As the nation opens its international border and all states’ internal borders … it is anticipated that choice for tenants will decline as landlords convert investment properties back to short-term holiday rentals,” the report read.
“This is likely to further tighten the cities’ rental markets.”
Domain said most cities had recorded a monthly decrease, except Adelaide and Hobart, which remained steady.
Their vacancy rates are extremely low, at 0.3 per cent and 0.2 per cent respectively, making it “impossible” for people to get a lease.
In Sydney, the vacancy rate is well short of pre-Covid levels and the lowest since November 2017, at 1.7 per cent.
Melbourne has its lowest vacancy rate since March 2020, at 2.1 per cent.
Domain predicted demand would continue to spiral for both of those cities because they generally attracted more overseas migrants and were tourist destinations.
“This will also be the case for Australia’s other typical tourist hot spots,” the report read.
Canberra, Brisbane, Adelaide, Perth and Hobart have the lowest vacancy rates since Domain records began, while Sydney and Darwin are close to multi-year lows.
In Canberra, available rentals dropped 27.2 per cent compared to last month, with the nation’s capital reaching a record low of 0.5 per cent.
Perth also fell to a historical low of 0.5 per cent, and with the hard border now down, Domain said it could mean the rental market would tighten further.
Domain is also predicting potential rental price increases across the country.
“While investment activity is rising, the opening of international borders will spiral rental demand since most overseas migrants rent upon arrival,” the report read.
“This will be felt the most in inner cities and around universities — areas that still have elevated vacancy rates compared to pre-pandemic levels — as rental demand has been severely hampered by international border closures.”
Meanwhile, the latest auction report showed Sydney and Melbourne had the highest number of listings in February since Domain records began.
For the first time in almost two years, Sydney’s unit clearance rates outdid houses, which Domain attributed to rising investor activity and affordability issues.
Sydney’s median auction house price is up 19 per cent over the year to $1.971m, while Melbourne’s is up 7.5 per cent to $1.21m, but in both cities the price momentum has slowed.
Canberra saw an annual increase of 21.1 per cent to $1.09m, while Brisbane grew by 37.7 per cent.
Adelaide recorded its highest auction median for houses since records began, leaping 26.6 per cent.
Clearance rates for units are higher in Sydney, Brisbane, Adelaide and Canberra, but housxjmtzywes still outdo units in Melbourne.
