Melbourne rental market struggles to recover

Most capital cities saw vacancy rates remain stable over the month, except for Sydney which saw a minor decrease from 3.6 per cent in October to 3.5 per cent in November. Brisbane also recorded a decrease from 2.0 per cent in October to 1.8 per cent in November.

Melbourne’s vacancy rate remained at 4.4 per cent in November and is the highest vacancy rate in the nation. This time last year, Melbourne’s vacancy rate was low at 2.2 per cent.

Hobart’s vacancy rate remains the lowest in the nation at 0.6 per cent.

Meanwhile, the surplus of rental property is most acute in Melbourne and Sydney’s CBDs.

The Melbourne CBD vacancy rate stands at 9.1 per cent in November. Still, this was a decline from a high of 10.8 per cent in September, which mostly consisted of units, 2,137 vacant units in September falling to 2,030 in early December.

Sydney CBD vacancy rate peaked at 16.2 per cent in May 2020 but has declined to 9.5 per cent in November. Currently there are 705 vacant units as at December 2020, declining from 1,214 in May 2020.

Asking rents

Over the month, capital city average asking rents increased 0.4 per cent for houses but decreased 0.2 per cent for units for the week ending 12 December 2020. Average asking rent for houses now sits at $540 per week, while asking rent for units sits at $408 per week for units.

Most capital cities recorded increases in both house and unit asking rents, with Darwin recording the highest increase of 6.7 per cent over the month for houses and 4.3 per cent in unit asking rents, followed closely by Hobart which recorded a 6.4 per cent increase in house rents and 3.3 per cent increase in unit rents.

Sydney recorded rental increases in houses of 0.9 per cent but a decline in unit rents of 0.6 per cent. Canberra also recorded increases in house rents of 3.5 per cent and unit rents declined by 1.2 per cent.

Brisbane, Adelaide and Perth house and unit rents also increased over the month.

However, Melbourne recorded declines in both house and unit asking rents over the month of 0.1 per cent and 1.4 per cent, respectively.

According to SQM Research’s managing director, Louis Christopher: “Rents for units in our two largest cities are still falling, though I note there appears to be a commencement of a reversal in the abundance of listings in the CBDs of these two cities.

“They are still very elevated. But we could be starting to see some of the population moving back to the CBD and inner city locations.”

Year-on-year, capital city average asking rents declined for both houses and units, 1.8 per cent and 6.0 per cent, respectively.

Sydney in particular recorded a high 6.7 per cent decline in houses and 9.6 per cent decline in units in November 2020. Melbourne’s asking rents also declined year-on-year, 4.1 per cent for houses and 6.7 per cent for units.

Darwin’s year-on-year house rents saw a significant 21.2 per cent growth, and Perth house rents increased by 10.5 per cent and units 9.5 per cent growth over 12 months.