Rental Vacancy Rates Inch Upward, Offering Slight Respite for Tenants Amidst Ongoing Challenges

Amidst the ongoing struggle for affordable housing, tenants have seen a modest relief as national rental vacancy rates edged higher in December, according to new PropTrack data. While the increase is a positive signal, renters are expected to grapple with persistently challenging conditions throughout 2024.

Renters have found a slight reprieve with a marginal increase in the national rental vacancy rate during December, as indicated by the latest PropTrack data. The vacancy rate rose by 0.05 percentage points (ppt) to 1.12%, a welcome shift for tenants amidst the challenging conditions that characterised 2023. However, despite this slight uptick, renters are likely to face continued difficulties in securing affordable housing throughout the upcoming year.

For context, the national vacancy rate decreased by 0.13 ppt over the year, reflecting the prevailing tight market conditions. According to PropTrack senior economist Eleanor Creagh, tenants are grappling with limited stock, leading to increased competition, and placing pressure on household budgets. While the easing of vacancy rates in December provided some relief, rental markets remain tight nationwide.

Since March 2020, the national vacancy rate has decreased by more than half, demonstrating a 54% decline in available rentals in capital cities and a 50% decrease in regional areas. Melbourne experienced the most significant tightening of conditions in 2023, followed by Sydney and regional Queensland.

Tenants have seen a modest relief as national rental vacancy rates edged higher in December, according to new PropTrack data.

In Melbourne, the vacancy rate saw a slight increase to 1.18% in December, although it remained 0.33 ppt lower over the year. Sydney’s vacancy rate climbed to 1.37% last month, with a decrease observed throughout the year. Brisbane’s rental market remained extremely tight, with vacancies holding below 1% despite a small increase in December.

Adelaide and Perth maintained their status as the toughest rental markets, with only 0.69% and 0.73% of rental properties available in each city in December. However, conditions in these cities eased slightly over the year, with a marginal increase in vacancies. Regional areas also experienced a modest easing, with a 0.06 ppt increase in vacancy rates last month.

The scarcity of available rental homes, rising rents, and the broader cost-of-living crisis have prompted an increasing number of renters and homeowners to turn to house sharing. Flatmates.com.au reported a 22% increase in new members and a 35% surge in new property listings during 2023, indicating a growing demand for share accommodation.

Looking ahead, PropTrack’s Eleanor Creagh anticipates that tenants will continue to face challenging conditions in 2024, given the persistently low levels of vacant properties. However, she notes that the rental market’s deterioration is unlikely to mirror the rapid pace seen in 2022 and 2023, potentially leading to a stabilization and slower increase in rental prices in the coming year.

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