Australia’s rental vacancy rate
Australia is experiencing its lowest national rental vacancy rate in decades. This situation is widely considered a rental crisis, particularly when looking at the current increase in the country’s employment rate. The issue is clear: Australia has a high number of jobs available in various industries across both the public and private sectors, yet the country does not have sufficient rental housing availability for people relocating internationally and between states.
What does Australia’s record-low rental vacancy rate mean?
At the height of the pandemic in 2020, Australia’s national vacancy rate was between 3-4% with some cities’ rates rising to higher than 5%. At present, the national rental vacancy rate is below 1%.
For context, the term ‘vacancy rate’ refers to the percentage of vacant rental properties in relation to all available properties in a specific area. In other words, the vacancy rate indicates the available supply of rental property based on tenant demand. A vacancy rate of around 3% is typically considered to represent a healthy balance between tenants and property owners. A rate below 2% indicates a high rental demand while a rate above 4% means the housing supply is significantly higher than the demand.
The current vacancy rate of 0.8% leaves Australia’s rental market highly competitive. Finding rental property is challenging; rental prices have drastically increased due to high demand, and landlords have the ball firmly in their courts.
Thousands of Australians have relocated from capital cities to regional and rural areas of the country in the past couple of years. The reopening of international borders has also had a major effect and with international migrants and students returning to Australia in early 2023 for the start of the new year, rental conditions are likely to become even tougher in the following months.
What about Australia’s increase in employment rates?
Recent data released by the Australian Bureau of Statistics (ABS) show that Australia’s employment increased by double what market analysts forecasted. Employment increased by more than 30,000 people and the employment rate is expected to continue growing. According to the head of labour statistics at the ABS, Bjorn Jarvis, the working-age population in Australia is more employed at present than it has ever been.
A separate data report by the ABS states that job vacancies in Australia were 107.4% higher in August 2022 than they were in February 2020, prior to the start of the pandemic. The proportion of Australian businesses reporting job vacancies has steadily increased since early 2020 until the present, spanning industries such as mining, manufacturing, construction, wholesale trade, retail trade, accommodation, food services, transport, media, telecommunications, financial services, public administration, safety, education, healthcare, arts, recreation, and more.
Professional interstate and international relocation support
The recently announced national Housing Accord aims to encourage the building of a million new well-located houses over a period of five years, starting in 2024. This is one of a handful of strategies rolled out to tackle the rental housing problem in Australia and stabilise the rental market, providing tenants with a wider variety of quality, affordable, safe and well-situated housing that meets their unique needs. In the meantime we will just have to see what 2023 brings with it in regards to the property market.
