Melbourne leads continued easing of rental market with rents unlikely to rise until 2015: SQM

The Melbourne residential vacancy rate increased from 2.7% in May to 2.9% in June, as the rental market eased slightly in June, new figures from SQM Research show. 

A vacancy rate of 3% is considered to indicate a balanced market between renters and landlords.

In total 12,459 rental properties were vacant in Melbourne in June. 

Nationally, the vacancy rate increased by 0.1 percentage points to 2.2% in June with a total of 63,320 rental properties vacant nationwide over the month. 

The rising vacancy rate is expected to put pressure on rents rising further in 2013 and possibly also in 2014. 

Rental pressures eased in Sydney (1.8% to 1.9%), Perth (1.3% to 1.5%), Brisbane (1.9% to 2.1%) and Canberra (1.5% to 1.7%). 

Darwin’s property market swung further in favour of investors with vacancies falling from 1% to 0.8% in June with just 196 properties vacant.  However the Darwin vacancy rate is double what it was a year ago. 

Hobart was the only other capital city market to record a tightening in its vacancy rate from 2.7% to 2.5%. 

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SQM Research notes that Canberra’s vacancy rate is up 0.9 percentage points over the past year while Perth’s vacancy rate is up 0.8 percentage points - a “side effect of the slowdown in Australia’s commodities boom, as many of the nation’s mining towns are located in that part of the country”. 

“As stated with May's result, it has become apparent that vacancy rates are now rising. Causations behind the rise vary from city to city,” says Louis Christopher, managing director of SQM Research. 

“For example the rises in Melbourne and Canberra are as a direct result of rises in completions of new residential dwellings throughout 2012 and early 2013. The rises in Perth appear to be more demand related. 

“The net result out of this is that rents will struggle to rise for the remainder of this year and 2014 could see zero rental growth as an average for the capital cities. 

“Indeed, we have evidence rents are already falling in at least one city, being Canberra.”

SQM’s calculations of vacancies are based on online rental listings that have been advertised for three weeks or more compared to the total number of established rental properties.