Vacancy rates down but Sydney and Melbourne markets continue to struggle

Exterior of an apartment building.

Property vacancy rates continue to fall in the majority of Australian capital cities, causing rents to edge upwards as tenants compete for a limited supply of housing.

The latest figures from Archistar reveal that house vacancy rates are lowest in Canberra at 0.4%, followed by Adelaide (0.6%), Darwin (0.8%), Perth (0.9%) and Hobart (0.9%). Brisbane also posted low numbers at just above the 1% mark.

The number of unoccupied units has also been steadily dropping, putting further upward pressure on rents. However, things have been tracking in the opposite direction in Melbourne and Sydney, where inner-city apartment vacancies have reached record highs.

Archistar chief economist Andrew Wilson said landlords face an uphill battle in Melbourne, where “interstate migration shifts and a CBD apartment glut are providing relief for local tenants.”

"Similarly, Sydney’s inner city apartment market also reflecting the impacts of border restrictions is providing more choices and lower rents for tenants - with no relief for landlords in sight."

Capital city vacancy rates

CityHouseUnitTotal
Sydney1.9%5.2%3.8%
Melbourne2.5%7.3%4.5%
Brisbane1.3%2.7%1.4%
Adelaide0.6%1.9%0.9%
Perth0.9%1.6%1.1%
Hobart0.9%1.8%1.1%
Darwin0.8%0.8%0.8%
Canberra0.4%1.6%0.9%

Both Sydney and Melbourne recorded vacancy rates well above the 3% benchmark considered healthy by the Real Estate Agency of Australia. Not surprisingly, Melbourne is faring the worst of the two, with 4.5% of homes currently unoccupied. 

The lingering effects of lockdown and a dearth of international students are expected to keep rents in the two major cities low for the foreseeable future, particularly in the inner-city apartment markets.

And while rents in other capital cities have been buoyed by a shortage of supply, recent changes to the JobKeeper and JobSeeker programs could see things take a turn for the worse.

With an estimated 1.1 million Australians on JobKeeper throughout the March quarter, its conclusion is expected to cause significant job losses. According to secretary to the Australian Treasury, Steven Kennedy, an estimated 150,000 Australians will be out of work.

An increase in the number of tenants struggling to make rent could see vacancy rates drift upwards in the coming months, and Sydney and Melbourne won’t be the only cities dealt a heavy blow. 

For more information on property and lending trends, head over to our home loan statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

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