Renters operating in a 'landlord's market' as vacancy rates remain under 1 per cent | The Business

Property website Domain's latest research shows rents are at record highs in all capital cities, driven by demand for houses, which rose 7.7 per cent in the year to June and 5.2 per cent in the regions. At $850 per week, Sydney is the most expensive city to live in after recording the largest quarterly jump for houses in four years. Darwin overtook Perth to become the second least affordable city. When it comes to units, Sydney again tops the list, followed by Perth, Brisbane and Darwin.

Domain's chief residential economist Nicola Powell says renters are operating in a landlord's market. "So I think what we have seen, particularly over the recent quarter, is an amalgamation of everything happening in terms of strong rates of population grows, not enough rental supply, an under supply of housing, affordability barriers for tenants transitioning to being a homeowner." Grattan Institute's Matthew Bowes says "because we've seen high interest rates for a number of years now, that does reduce housing supply, which means that over time there are fewer choices on the rental market for renters.”

The percentage of available homes to rent -- the national vacancy rate -- for both houses and units -- remains under 1 per cent, with Darwin's as low as 0.1 per cent. That means renters are competing for fewer properties -- giving the landlords the room to raise rents. Nicola Powell says it's too early to say whether the government's tax changes will push rents up further beyond Treasury's forecast of an extra $2 a week. "My concern comes around the future of what new investment is going to do in Australia and how that is going to feed through because we are likely to see fewer new investors coming into the rental space, which will eventually tighten rental supply and put further strain on Australia's rental market."
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