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VACANCY RATES MARGINALLY DECLINE IN AUGUST
by Louis Christopher, CEO
Data released by SQM Research today has revealed the national residential rental vacancy rate marginally declined in August 2019 to 2.2% from July. The total number of vacancies Australia-wide is now at 75,757 vacant residential properties, a decrease of 589 over the month but up 5,310 dwellings over the past 12 months.
Sydney, Perth and Adelaide recorded minor decreases of 0.1% in vacancy rates. Brisbane, Canberra and Hobart increased by 0.1%, with Hobart remaining the lowest in the country at 0.6%. All other capital cities remained steady over the month.
Sydney continues to have the highest vacancy rate in the country at 3.4%, this time last year the rate was lower at 2.8%.
Residential property rental vacancy rates remained largely steady for the month of August with perhaps the exception of Perth which continues to record a recovering rental market. While Sydney did record a slight decline our expectation is the Sydney rental market will still fall from here. We believe rental vacancy rates will peak at 4% in Sydney by the end of this year.
Asking Rents
Over the month, Capital city asking rents declined 0.4% for houses but remained steady for units for the week ending 12 September 2019 to record asking rents of $544 per week for houses and $438 per week for units.
In comparison, over the 12 months, asking rents for houses declined 1.4% and a 0.5% decline for units.
Sydney recorded declines in asking rents over the month for both houses and units by 1.3% and 0.2% respectively. Melbourne also saw declines in both houses and units over the month, dropping 0.2% for houses and 0.7% for units. Hobart’s unit rental market increased 4.8% over the month but houses declined 0.5%.
Brisbane continues to be the only capital city to record increases in weekly rents over the month for both houses and units at 0.6% for houses and 0.9% for units.
CHART OF THE WEEK
Perth Rental Market
This week, given our August update on Residential property rental vacancy rates, I thought the chart on the Perth rental market is worth studying further.
After an extended housing downturn, it appears that Perth’s rental market is in a strong recovery phase. While rental vacancy rates are elevated at 2.9% the trend has been down since the start of 2017 where they peaked at 5.5% on our numbers. The lowest rental vacancy rate recorded on our numbers for Perth was just 0.5% in March 2012, which was at the peak of the Western Australian mining boom.
As a result of the tightening rental vacancy rate, asking rents have been rising again. Perth asking rents bottomed out at $410 a week for a house and $310 a week for a unit. That occurred in October 2017. Asking rents for houses has since risen and now stands at $440 a week for a house and $337 a week for a unit.
At the peak they were $628 for a house and $476 for a unit (Feb-Mar 2013), so there is still quite a way to go yet before Perth rents hit new highs. And given the peak, it does go to show how much of a rout the market was in.
DISTRESSED PROPERTY OF THE WEEK
This 3 bedroom, 1 bath home in the Perth suburb of Greenwood, is situated on a generous block approximately 728 sqm in size, and is selling for $340,000 to $360,000 after an initial asking price of $395,000 in June 2019. Greenwood is within the City of Joondalup and approx. 17 km north of Perth's CBD.
The home is ideally located close to schools, public transport, local Greenwood shops, Kingsway Shopping Centre and close to Lake Goollelal and the bushland at Yellagonga Regional Park.
The property is well maintained and well-priced. Based on current data, asking prices for houses in postcode 6024, range from $440,000 to $500,000. Asking prices for 3-bedroom houses in the postcode suffered a 7.6% decrease over 3 years however in the last month there has been a marginal decrease of 0.4%. The home last sold for $455,000 in 2013.
The home’s new owner could add their own personal touch to the home and move right in, or rent it out or sub-divide and develop the block into duplex or triplex homes (subject to State Planning/City of Joondalup approvals).
You can expect weekly rents of $360 to $375 for houses in this area. In June 2019 the home was advertised for rent at $300 per week. Over the last 12 months there has been a 0.6% increase in rents however, over the month there has been a 0.4% decline. An implied gross rental yield of 4.2% can be achieved for 3 bedroom houses. Current vacancy rate is 1.9% after peaking at 4.6% in May 2017.
SQM website features free property data that is now more interactive, easier to navigate and user-friendly, so keep monitoring this market’s growth at SQM Research’s free property data. Also consider the Property Valuation product for more in-depth data and property price estimator.
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SQM RESEARCH HOUSING INDEXES
Next update: 24 Sep 2019
Next update: 20 Sep 2019
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