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Tuesday, 12 October 2021

The vacancies conundrum

Vacancies tick higher

Residential vacancy rates were just a notch higher in September, albeit at just 1.7 per cent nationally, according to the latest figures from SQM Research.

There were modest increases in Brisbane, to 1.4 per cent, and Sydney, to 2.7 per cent.

Still, vacancy rates overall were much tighter than a year earlier, and the trend has been down. 

Vacancy rates remained abnormally high in the CBDs of Sydney (8.2 per cent) and Melbourne (8.4 per cent) due to the absence of the international traveller and student chorts, but elsewhere rental markets have been very tight and asking rents are rising.

This has been against what most people would've reasonably expected to see given the boom in detached house construction, and the closed international borders.

The question is...why? There are a few possible factors. 

There has been a shift away from share houses, and some folks might be renting more than one property through the pandemic restrictions (so some properties might be physically vacant but still rented out). 

Probably the best explanation for me is that Australia's robust population pyramid has never been so skewed towards 20 to 35 year olds - the prolonged absence of international students notwithstanding - and cheaper unit rents have encouraged many into taking their first rental.

Of course, there are many moving parts, as always. 

The AFR reported that New South Wales Premier Perrotet has received advice that Australia will need to see the "explosive" growth of 2 million migrants over the next five years to solve skills shortages. 

I'm not sure we'll see that, but it's an aggressive opening gambit and it does suggest that there will plenty of demand for rentals once the borders are reopened and immigration is restarted in earnest. 


In other news, stamp and land transfer duty climbed to near $11 billion in New South Wales over the year to August, although the lockdowns will have bitten since.

Meanwhile, the Housing Industry Association reported a modest increase in new home sales last month.

Source: HIA