Rental vacancy rates have fallen to a new record low in October, and it is expected to only get worse as the new academic year begins in a few months.
Domain’s latest rental vacancy rate report showed the national vacancy rate nearly halved in October compared with the previous year, down from 1.5% in October 2021 to 0.8% last month.
In Sydney, it dropped to a record 1%, while Melbourne fell to a record 1.1%. Around 3% vacancy is considered balanced.
“There is a rental crisis across the country, and it’s going to get more serious,” Domain chief of research and economics Nicola Powell told The Sydney Morning Herald.
Powell said renters applying for properties face tough conditions, and this could worsen as the 2023 school year begins and as more international migrants and students flock to the country.
More housing was needed to cater for overseas migrants, she said, as was more social and affordable housing for those most in need.
“If you are on a low income in Australia, you would find it extremely difficult to find an affordable rental right now,” Powell said.
In Sydney, vacancy rate fell for the fourth consecutive month and the number of rentals plunged by 53%, due partly to investors selling to owner-occupiers.
Vacancy rates are now well below the 3.8% peak posted in 2020, when international borders were closed to curb the spread of COVID-19.
The low rates have driven up rent costs in Sydney by 4.8%, or $30 per week, to a $650 median in the September quarter, Domain data showed.
The case was similar in Melbourne, where house rents surged by 2.2% over the quarter to a weekly median of $470. Melbourne’s 1.1% vacancy rate equalled a low first set in 2018 and was well below the highs of 5.2% in 2020.
Brisbane’s vacancy rate was still tight, but was slightly up to 0.7%, while Perth’s rate slipped to a record 0.3% and Adelaide posted the tightest rental market among the capital cities with 0.2%, SMH reported.
Hayden Groves, Real Estate Institute of Australia president, said according to property managers, some prospective tenants were penning up to 50 applications for a home.
The difficulty in finding a rental after so many applications also saw some people giving up.
“It is a very challenging time for tenants and the industry acknowledges that,” Groves told the publication.
He added that it was those tenants who were paying rent on time and looking after their rentals well who are valued by landlords and would be in a good position to negotiate a smaller rise in rents.
Leo Patterson Ross, Tenants’ Union of NSW chief executive, said renters were making up to 100 applications for a home unsuccessfully – and in some cases, after receiving a no-grounds eviction with a set end date.
“It pushes people into quite unsafe environments,” Ross said. “They have to compromise on location but also on the quality and the size, and that can mean people are placing themselves in harm’s way in order to keep a roof over their head because there just aren’t the options available to them. This is really a very risky way to run an essential service.”
In this competitive system, some tenants who can afford to pay their rent are being turned away because another applicant is deemed more attractive.
Existing tenants may be less likely to ask for repairs, Ross said, to avoid the risk of getting a no-grounds eviction and facing the “Hunger Games of finding a new home,” SMH reported.
