A short summary of Domain's Vacancy Rate Report for November 2023, shedding light on the current state of Australia's rental market.

Key Takeaways:

National Overview:

Australia's vacancy rate holds at a record low for the third consecutive month, remaining at 0.8%.

Despite marginal improvements in some capitals, the rental market remains fiercely competitive for tenants nationwide.

Regional Variations:

Vacancy rates in Perth hit a record low, while Sydney and Adelaide are close to all-time lows.

Conditions vary, with rates decreasing in Hobart and Canberra but increasing in Sydney, Melbourne, Brisbane, and Darwin.

Stabilising Conditions:

Vacancy rates in Adelaide, Perth, and across the combined capitals and regionals remained steady in November, indicating a potential stabilisation for tenants.

Market Equilibrium and Demand:

Our rental markets are considered in "equilibrium" at around a 2% vacancy rate. The chronic undersupply of rental stock and rising property prices against increasing demand continue to drive market competitiveness.

A slight easing of demand relative to total supply was observed nationally in November, reflected in the average views per rental listing.

Future Outlook:

Dr. Nicola Powell, Domain’s Chief of Research and Economics, emphasised the need for a significant boost to rental stock to achieve a more balanced market (vacancy rate of 2-3%).

Increased investor activity and more development are crucial to addressing the current shortage.

Monthly Vacancy Rates (November 2023):

Location	Vacancy Rate
National	0.8%
Combined Capitals	​0.8%
Combined Regionals	​0.8%
Sydney	1.0%
Melbourne	1.0%
Brisbane	0.9%
Perth	0.3%
Adelaide	0.3%
Hobart	0.8%
Canberra	1.4%
Darwin	1.5%

Market Analysis:

Sydney, Melbourne, and Brisbane experienced a slight increase in vacancy rates, showing signs of stabilising conditions.

The upcoming changeover period is expected to be highly competitive due to historically low rental stock.

Dr. Powell anticipates a potential tipping point in 2024, driven by stretched affordability and an increase in renters opting for house shares or transitioning to ownership.

City-Specific Highlights:

Sydney's vacancy rate increased for the first time since June, driven by a surge in rental supply.

Melbourne saw its first monthly increase since June, attributed to a boost in rental stock.

Brisbane experienced its second successive monthly rise, indicating stabilisation.

Perth's rate remained steady at 3%, emphasising the need for increased rental stock.

Adelaide's vacancy rate remained competitive at 0.3%, requiring a significant supply boost.

Darwin witnessed the largest monthly change, reaching a 5% vacancy rate, the highest among capitals.

Hobart's rate dropped to 0.9%, the lowest since March 2023.

Canberra's rate fell to 4%, the second-highest among capitals, showing less competitive conditions.

Conclusion:

While the rental market continues to favor landlords, signs of stabilising conditions are emerging in some cities. The upcoming changeover period is expected to be exceptionally competitive, emphasising the need for increased rental stock to achieve a more balanced market.

Looking forward to your thoughts on these market insights!

Donie