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

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Monday, 18 July 2016

Perth vacancies hit 5 per cent

Perth vacancies rise

Perth vacancy rates rose to a fresh cyclical high of 5 per cent in June according to SQM Research, suggesting that there is a way to go before any property market recovery takes hold in the Western Australian capital.

It's not that unusual for a capital city to experience elevated vacancy rates towards the nadir of a cycle.

In outer ring Sydney we saw vacancy rates of above 5 per cent around 2003 and 2004, for example, yet prices are well on their way to all but doubling since that time. 

Deloitte Access reported this week that the worst is now over for Western Australia's economy after 18 months of declining activity.

Nevertheless, according to CoreLogic-RP Data sees home values 4 per cent lower than a year ago in Perth, and the bottom is not yet in.

There might be light at the end of the tunnel for the resources capitals.

The seasonal Darwin market looks as though it has already turned a corner with the vacancy rate in the Top End falling to 3 per cent.

But Perth is struggling to absorb a still elevated number of dwelling completions.

Nationally the vacancy rate of 2.5 per cent in June was marginally higher than the 2.4 per cent recorded at the same time last year.

Smoothing the figures on a 4mMA basis suggests that Hobart and especially Canberra have seen their respective market tighten considerably as the hiring freeze has thawed in the Australian Capital Territory.

Melbourne and Sydney are still absorbing apartment completions reasonably comfortably even at this late stage in the construction cycle, with completions slower on average to come online for multi-unit developments.

SQM Research reports that asking rents for Sydney units and apartments rose by 5.3 per cent over the financial year. 

Last week Domain reported a similar result, with median unit and apartment rents in Sydney up by 5 per cent over the year to June 2016.

Here's what the ABS reports for rental prices, indexed to 100.

That said, there is a record high volume of townhouses, units, and apartments still under construction in Australia, as I looked at in more detail here

SQM's media release can be found here.