The total number of rental vacancies Australia-wide now stands at 39,568 residential properties, which is an increase from 31,924 in November. Sydney, Melbourne, Brisbane, Canberra and Darwin vacancy rates rose from 1.4%, 1.5%, 0.8%,1.4% and 1.2% to 1.8%, 1.7%, 1.1%, 1.9% and 1.5%. In the smaller capital cities, Perth, Adelaide and Hobart, vacancy rates sat below 1.0% over December.

Vacancy rates in the Sydney CBD, Melbourne CBD and Brisbane CBD increased to 3.6%, 3.3% and 1.8% over December. SQM research attributes the increase to seasonal factors such as international and final year university students finishing their tenancies. SQM research still has a warning in place for extreme tight conditions in the rental market over the months of January, February, and March 2023 for most capital cities.

Rents

Over the past 30 days to 12 January 2023, capital city asking rents rose by another 2.2% with the 12-month rise standing at 24.6%. While national rents across all regions, rose by 18% for the same 12-month period.

The national median weekly asking rent for a dwelling is recorded at $556.72 a week. Sydney recorded the highest weekly rent for a house at $899.98 a week.

While Adelaide units offer the best rental affordability of all capital cities at $395.93 a week. Louis Christopher, Managing Director of SQM Research said: “The rise in residential property vacancies was to be expected given the annual exodus of students at the end of the year. This should quickly turn over in January and February in particular – normally a time when rental demand surges and there is short supply.

At this stage asking rents are still surging ahead. We are just not seeing any relief on rents present. However, I remain hopeful later in 2023 we will see some type of stabilisation in the rental market once we see higher completion rates and a slowdown in housing formation.” On the flip side, the surge in rents is pushing up rental yields, especially with falling prices. I believe ‘would-be’ investors will be attracted to higher rental yields in later 2023, once we see a pause in cash rates.”

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