Rental vacancy rates ease over May but still tough for tenants

Home rental vacancy rates general eased over May although conditions remain clearly tough for tenants in most capital city markets.

The national capital city vacancy rate was steady for houses at 2.1 per cent over the month with units easing to 2.2 per cent for an overall result for total homes of 2.2 per cent.

Perth continues to record the highest house vacancy rates of all the capitals at 3.8 per cent over May although the recent trend is clearly declining from the peaks of last year.  Canberra and Hobart have the lowest vacancy rates for houses at a very tight 0.9 per cent and 0.6 per cent respectively.  The Melbourne market is also offering few choices for tenants with a vacancy rate for houses of just 1.3 per cent.

Darwin and Perth again recorded the highest vacancy rates for units over the month at 4.1 per cent and 4.2 per cent respectively although these results were lower than May last year.  Despite predictions of an apartment glut due to recent record levels of construction, vacancy rates for units in Sydney, Melbourne and Canberra remain tight.  Unit rates in Brisbane however continue at higher levels recording 3.1 per cent over May.

May’s slight easing in vacancy rates reflects increased listings over the month following the significant holiday distractions of April.  Capital city rental markets however generally continue to record chronic shortage of available homes with higher rents a likely consequence.

Recent policy initiatives to increase interest rates for investors and generally tighten lending conditions for this group will likely be more bad news for tenants if it results in fewer available rental properties.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.