Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 16 July 2014

Mining states see increase in vacancy rates

SQM Research released its vacancy rate data for June 2014, which showed an increase in the national vacancy rate to 2.3% (May: 2.2%).

The data by capital city showed something of a mixed picture (click chart):

Adelaide and Hobart, two cities where property markets have been relatively lacklustre, which tends to impact the level of new supply, have seen vacancy rates fall to relatively tight levels at just 1.6%.

This is good news for landlords, and not such good news for tenants.

On the other hand, the past 12 months has seen vacancy rates increase in the cities more impacted by the peaking of the mining and resources construction boom:

-Darwin 0.8% to 1.6% since June 2013;

-Brisbane to 2.0% to 2.4% since June 2013; and

-Perth to 1.6% to 2.5% since June 2013.

Vacancy rates have remained fairly steady in Sydney over the past year, now sitting at 1.9%.

In Sydney's case, we might expect to see vacancy rates in some inner southern suburbs drag up the city-wide averages over the coming years.

Meanwhile Melbourne continues to record the highest vacancy rate at 2.7%, although this is down from the higher level of 2.9% recorded a year ago.

Overall, the increasing vacancy rate suggests this suggests that rental growth should be relatively soft, and in this era of lower inflation certainly softer than it has been in the past.

SQM Research provided insightful commentary on the data in its release here.