February rental figures bring fresh concern

This decline in availability affected both capital cities and regional areas, although capital cities experienced a more significant drop. Consequently, rental vacancy rates in capital cities now sit at 1.04 per cent, which is below that of the combined regions at 1.14 per cent and marks a reversal from the trend observed between 2020 and 2022 when rentals were hardest to find outside of metro centres.

Sydney and Melbourne drove the further tightening of rental markets, with vacancy rates reaching their lowest recorded levels, decreasing by 0.18 and 0.16 percentage points to 1.11 per cent and 1.07 per cent, respectively.

Perth and Adelaide retained their positions as the two most constrained rental markets in the country, with conditions worsening further over the course of the month. Both cities have sustained rental vacancies below 1 per cent since 2022. Perth now sits at 0.85 per cent, while Adelaide is marginally higher at 0.83 per cent. Brisbane is not far behind, with a vacancy rate of 0.95 per cent.

Despite showing signs of improvement in early to mid-2023, regional markets are also grappling with limited availability. Vacancy rates in these areas declined over the latter half of 2023, now standing 0.22 percentage points lower than a year ago.

PropTrack senior economist and the report’s author Paul Ryan was clear that the situation appears to be worsening for rental markets, particularly in the capitals.

“Most capitals and regional areas were facing as limited or more limited availability than they were compared to a year ago.

“Sydney and Melbourne have seen notably larger declines than other capitals, with vacancy rates in both cities falling 0.3 percentage points compared to February 2023.

“Rental markets in Brisbane, Adelaide and Perth remain extremely challenging, with vacancy rates in all three cities below 1 per cent,” Ryan said.

Given the lack of supply, Ryan noted that affordability is also at a concerning point for the nation’s tenants.

“With rental market conditions extremely tight, competition for rentals is likely to remain tough. In the near term, that is likely to continue to put pressure on rents and further strain rental affordability, which is already at its worst level in at least 17 years,” he said.