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Rents set to rise in 2023

Rents set to rise in 2023

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The news feeds have been whirring in August 2022 reporting a shortage of rental accommodation or listings

AFR – Home Rental listing slump to record low.
7:30 Report – Disputes between landlords and tenants becoming common during rental crisis.

These news reports picked up on data released by SQM property research in Aug 22 showing Australia’s residential property vacancy rate (houses and apartments) dropped to a record low of 1.0% in July 22. (Metro Melbourne was 1.6% at the same time).

While this rate is well below the vacancy rate for the last 2 years during Covid and lockdowns, let’s look back beyond that time, to see how the rental market behaves in more normal times.

You can see (using the same source of SQM research and the same time of year) the vacancy rate usually sits around 2.0% which is more in line with the current vacancy.

   Melbourne CBD  Metro Melbourne
   July ’222.0%1.6%
July ’218.2%3.6%
July ’208.8%3.1%
July ’193.0%2.0%
July ’182.0%1.6%
July ’171.8%1.6%
July ’162.1%2.0%
July ’153.5%2.3%

Several cities such as Darwin, Hobart and Canberra have a long history of sub 1% vacancies. Nationally the vacancy rate hovers around 2.0%.

By looking beyond recent covid times, we see the current market is not so much in a shortage crises, but reflects a more normal rental market.

That said, the Melbourne rental market is particularly seasonal (matching the weather). It usually slows through Winter, with Summer being the busy letting season. The recent SQM research shows the vacancy rate trending down in July which is unusual. It is normally increasing. This suggests the Summer of 2023, could be a hotter letting season than usual.

As a small aside, the combative subtext of landlord vs tenant by media reports does not help anyone in the residential rental market ensuring people enjoy a safe and happy home.

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