Rental shortage eases in December but remains near record-low

Australia’s chronic shortage of rental properties eased slightly in December, yet the number of homes available remains near record lows.

A combination of soaring population growth (up almost 650,000 in the 12 months to November), surging property prices that have pushed more people into the private rental market, and a slow pace of new builds crimping supply has aggravated the nation’s housing shortage in recent years.

PropTrack data, released on Friday, shows the national rental vacancy rate — a measure of the proportion of all rental properties that are vacant and available — edged 0.05 percentage points higher in November to reach 1.12 per cent.

In October, the rental vacancy rate hit a record low, falling to just 1.02 per cent over the month.

The data reveals Adelaide had the lowest rental vacancy rate, at just 0.69 per cent, closely followed by Perth and Brisbane at 0.73 per cent and 0.9 per cent, respectively.

Across other capital city markets, rental vacancy rates were slightly higher with Hobart at 1.02 per cent, Melbourne at 1.18 per cent, Sydney at 1.37 per cent and the ACT at 1.72 per cent.

The Northern Territory capital Darwin was the easiest place to secure a vacant rental with 2.65 per cent of all rentals available to lease.

However, no capital city market met the 3 per cent rate considered as a good balance between the interests of renters and landlords. If the rate falls below 2 per cent, landlords are at an advantage, leaving renters with limited options.

PropTrack senior economist Eleanor Creagh said with the number of vacant properties remaining at low levels, tenants would continue to face challenging conditions.

“Although vacancy rates eased in most markets in December, rental markets remain tight, and stock is extremely limited,” Ms Creagh said.

While the national vacancy rate fell 1.12 per cent over 2023, Ms Creagh said renters could expect the pace of rent hikes to slow in 2024.

“Conditions in the rental market are unlikely to deteriorate at the same pace as they did in 2022 and 2023, meaning rental prices could stabilise and increase at a slower rate than the past year,” she said.

Separate data released by Prop Track earlier this week found the median national rent increased 1.8 per cent over the December quarter to $580 a week.

Fresh monthly inflation data released by the Bureau of Statistics on Wednesday showed rental prices climbed by a blistering 7.1 per cent in the year to November, up from 6.6. per cent annual increase in October.

But the Bureau also acknowledged changes to Commonwealth Rent Assistance from 20 September — which increased the maximum rate available by 15 per cent — helped take some heat off price growth.

Excluding these changes to rent assistance, rents would have risen 8.8 per cent over the 12 months to November, the ABS said.

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