Domain’s latest Vacancy Rates Report February 2024 reveals that the national vacancy rate has reached an all-time low of 0.7% in February. This drop is driven by ongoing factors, including rapid population growth, a sluggish construction sector, and escalating property prices. However, on a national scale, the average views per rental listing decreased in February and continued to remain lower compared to the previous year, a trend observed in January.
“While the vacancy rate hits a record low, it’s crucial to consider the bigger rental market picture. The number of prospective tenants per rental listing is easing, indicating falling competition between renters. This supports the trend of slowing rental growth, suggesting demand is pulling back. This could be an early indicator of an increase in vacancy rates sometime this year,” said Domain’s Chief of Research and Economics, Dr Nicola Powell.
“There are a number of first-home incentives across the states and the prospects of the hotly discussed Help to Buy scheme. We’ve seen more first-home buyers entering the market. This trend will likely accelerate with the introduction of new incentives for first-time buyers, coupled with the possibility of interest rate cuts. This could translate to reduced demand in the rental market and an increase in available rental properties for tenants,” said Powell.
Looking at the capital cities movement:
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Sydney’s vacancy rate fell to a new record low of 0.8% due to a record low level of supply. However, average views per rental listing declined over the month and annually, highlighting slower demand.
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Melbourne’s vacancy rate decreased back to a record low of 0.8%, last seen in March 2023. This is the second consecutive month of a fall, the first time this has occurred in 12 months, supported by vacant rental stock falling to a record low. Despite this, views per rental listings have dropped both monthly and annually, suggesting rental demand is slowing.
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Brisbane has fallen for the second month in a row, the first time this has happened in 12 months, to 0.7%. It is 0.1 percentage points off its record low, supported by the lowest level of vacant rentals in 10 months. However, there was a monthly and annual decline in average views per rental listing, suggesting rental demand is slowing.
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Perth’s vacancy rate is back at its lowest point on record, 0.3% and is the most competitive city for tenants, along with Adelaide. This is the first monthly fall since August 2023 and it remains stubbornly tight, driven by a decrease in rental stock.
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Adelaide is the other most competitive city, steady at 0.3% and 0.1 percentage points off its record low. A boost in rental supply is needed to see an improvement for tenants.
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Darwin’s vacancy rate has declined to 1.3%, falling for the second successive month – the first time this has happened since April 2023. A drop in rental stock drives this. However, its vacancy rate is the highest of the capitals, along with Canberra.
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Hobart’s vacancy rate is steady at 0.7%, influenced by a rise in rental supply. This is the lowest vacancy rate since February 2023, a significant shift away from its record high in June 2023.
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Canberra’s vacancy rate decreased to 1.3%, its lowest vacancy rate since November 2022. It is the largest monthly change of the capitals, but conditions remain less competitive for tenants relative to other capitals.
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