Capital city vacancies drop
PropTrack released its latest rental report this morning, showing capital city vacancy rates falling to new record lows in Q1 2023.
On the other hand, regional vacancies have now begun to lift a little as the new supply hits the market, and as more workers head back to their city-based places of employment.
In fact, if you follow my Twitter feed, you'll have see SQM Research's data showing rental vacancies lifting in Hobart, Sunshine Coast, Gold Coast, Blue Mountains, Mornington etc.
Nationally, advertised rents across accelerated, with house rents up 6 per cent over the quarter, and with unit rents up 4.3 per cent.
Looking ahead, regional rental markets may continue to ease a little, due to a combination of new housing supply and internal migration back to the cities.
Capital cities, on the other hand - excluding Hobart and Canberra - have population and demand outstripping the supply of rental stock, so the rental pressures continue to intensify.
The rental dynamic in Sydney looks particularly alarming, with demand soaring at a time when supply is stuck.
PropTrack's rental report can be found here.
Tightened lending
With more and more people sharing rooms or living in tents and cars, it's surely past time to normalise tight lending conditions, especially for investment loans.
It's worth rewinding the clock back to February 2023, to the latest update on the 3 percentage points serviceability buffer settings in place.
This update noted that the buffer would remain in place, in part due to the potential for further interest rate rises.
Source: APRA
On the interest rates point, markets are pricing a near-zero chance of an increase in May.
Looking further ahead - and indeed up to several years out - interest rates are expected to decline.
On the risky lending point...well, arguably there isn't enough of it right now, given new home sales have crashed to decade lows, and construction insolvencies are steepling to record highs:
There has been quite a lot of online discussion on why the 300 basis points buffer - and for that matter higher mortgage rates for investors - have been maintained.
On the credit growth point, this has also slowed to only 0.3 per cent per month (which is basically nothing at a time when population growth is as high as it is).
The only remaining factor appears to be 'financial stability' risks, but this is always a nebulous point.
At some point tight lending conditions becomes a net negative for financial stability, while needlessly locking many would-be buyers out of the market.
In the meantime, I'm not exaggerating the case in saying that rents in many parts of Sydney are set to take a 50 per cent leap higher.