Pete Wargent blogspot

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

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Tuesday, 18 April 2017

Vacancy rates "tumble across the nation"

Vacancy rates down everywhere

Not quite in line with the popular prevailing narrative, SQM Research reported that vacancy rates tightened across all capital cities in the month of March 2017. 

In Canberra the vacancy rate fell to just 0.8 per cent, following the seasonal spike over Christmas.

In Hobart vacancy rates are insanely low at just 0.6 per cent.

And in Adelaide the vacancy rate dropped to 1.8 per cent.

Meanwhile in Sydney the vacancy rate dropped to just 1.7 per cent, including only 1.3 per cent in the CBD, and an incredibly low 0.8 per cent in adjacent Pyrmont. 

In one of Sydney's inner western suburbs that I track, Erskineville, the vacancy rate has dropped to just 0.6 per cent. 

The most notable result of all was seen in Melbourne, where the vacancy rate has now fallen from above 3 per cent at the end of 2014 to just 1.5 per cent.

This is the lowest monthly result in the Victorian capital seen since Q2 2010, and reflects mammoth population growth which is outpacing even the high rates of construction

Even at 'high rise central' Docklands and Southbank the reported vacancy rates were not seen to be alarming. 

In Sydney and Melbourne there do remain many thousands of units under construction which will hit the market in due course. 

Vacancy rates also declined in Perth, Darwin, and Brisbane in the month of March 2017, although asking rents in Perth and Darwin are still in decline.

Smoothing the figures on a rolling 6-month basis (albeit across the period that incorporates Christmas) suggests that Darwin's market may still be struggling along for a while to come, despite a significant improvement in March. 

I know for a fact that Brisbane still has thousands of apartments under construction, because I live nearby!

Perth has been through a very tough patch, but looks as though it may be very gradually turning a corner. 

The wrap

There have been more housing market op-eds this week than you can shake a stick at, some of which even demanded that young people don't buy a home. 

I don't know if anyone takes such blanket advice at face value given that Australia has housing markets operating at different stages in the cycle, but young Melbournites might justifiably be looking at these figures with increasing alarm.

Despite widespread predictions of an oversupply vacancy rates have been trending down in Melbourne for 5½ years now, and median asking rents have begun to soar, rising by 7.1 per cent over the past year for houses, and even by 5.1 per cent for units. 

In Sydney, median asking rents for houses have risen by 12 per cent over the past three years, compared to 9.4 per cent for units. 

The Reserve Bank slipped a cheekily dovish note into its Board Minutes released today, which just inched towards the possibility of a future rate cut.