Vacancy Rates Tighten as Rental Fee’s Continue to Rise

Weekly Real Estate Market Update with Leigh Martinuzzi MPG 

Vacancy rates for homes and units to rent have tightened in the first quarter of 2023. The current demand for property to rent and a chronic shortage of rental properties available have bought vacancy rates to a near-record low of 1.1%. Of course, this is putting upward pressure on rental fees also. While the December quarter saw an easing in rental demand and asking fees, this changed in the first quarter of 2023. Nationally, asking rents are up 2.5% in the past three months and 10.1% year on year. With property prices remaining buoyant and interest rates still high, property affordability is still out of reach for many. This is putting upward pressure on rental availability and demand.

Ms Ezzy from CoreLogic has indicated that immigration demand, particularly in our cities, has placed upward demand for inner-city accommodation. This may be a good reason why the demand for city accommodation is outpacing the demand for housing in regional areas. She reported that in the four weeks to April, new rental listings fell to just under 95,000, which is -17.3% below the same time last year and -36.3% below the five-year average.

The short-term outlook for renters is not looking great. Investors looking for higher rental yields are still holding back as property prices and interest rates remain high. Investors are favouring regional areas that are offering higher returns. When prices started to fall in 2022 rental yields strengthened, with national yields that are currently closer to 4% compared to about 3.2% this time last year. With the National Home Value Index rising over March (up 0.6% nationally), rental yields have slightly worsened. The supply and demand imbalance for the property is likely to remain. Current renters will choose to stay in their current property than risk finding a new place, and those looking to buy will hold off while interest rates and property prices remain high.

“While gross yields have expanded over the year, it’s likely net yields have declined. Weekly rents rose by approximately $48 per week between April 2022 and March 2023, however, the average weekly investor mortgage repayment on the typical Australian dwelling increased by $184, leaving investors $136 per week worse off.” Ms Ezzy. 

AUCTION CLEARANCE RATES

• Queensland – 45% (114/957)
• NSW – 56% (463/1289)
• Victoria – 52% (110/1010)
• ACT – 67% (46/68)
• South Australia – 71% (49/282)
• Tasmania – NA (1/154)
• Western Australia – 27% (11/612)
• Northern Territory – 40% (5/21)

*(Auctions/Private Sales)

REVIEW(S) OF THE WEEK 

Highly Recommended

We would highly recommend Leigh who was professional, knowledgeable, and clear in all communication throughout. We found Leigh to be friendly, courteous, and open to discussing all options. He provided us up to date understanding of the market and helped us navigate the whole process of selling smoothly and efficiently. – Seller

Great Agent! Very Upfront!

Leigh was the agent who sold us our house. Throughout the process, he was helpful, clear and very upfront. Made the whole process feel easy and represented the property well. – Buyer