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Vacancy Rates Increased in June 2019
by Louis Christopher, CEO
Data released by SQM Research today has revealed the national residential rental vacancy rate increased in June 2019 to 2.3%, an increase from 2.2% in May. The total number of vacancies Australia-wide is now at 78,690 vacant residential properties, an increase of 3,597 over the month and up 2,933 dwellings over the past 12 months.
Nearly all capital cities recorded minor increases ranging from 0.1% to 0.2% over the month, Darwin was the only capital city to record a decrease of 0.2% to 3.1% in vacancy rates.
Sydney continues to have the highest vacancy rates in the country at 3.5%, an increase of 0.2%. This is the highest for Sydney since 2005. Perth’s vacancy rate is not far behind at 3.2%, having increased 0.1%.
Melbourne’s vacancy rate increased to 2.0%. Hobart’s vacancy rate remains steady at 0.5% and continues to record the lowest vacancy rate in the country.
The increase in rental vacancies in June tends to be a seasonal rise for the start of winter however Sydney’s increases goes beyond seasonal factors and so our expectation remains that Sydney will reach a 4% vacancy rate before 2019 is completed.
Melbourne is also likely to record more rises in rental vacancies as newly completed dwellings purchased as ‘off-the-plan’ in the last boom, enter the rental market now.
In spite of the rise in vacancies this month, Brisbane, Adelaide and Hobart’s rental market is in favour for landlords as in these cities have also recorded moderate increases in asking rents for the month and continue to record muted dwelling completions.
Asking Rents
Capital city asking rents declined 0.4% for houses but remained steady for units for the week ending 12 July 2019 to record asking rents of $551 per week for houses and $441 per week for units.
In comparison, over the 12 months, asking rents for houses increased 0.4% but declined 0.7% for units.
Sydney and Melbourne’s asking rents for houses and units both declined in July. Sydney rents dropped 0.5% for houses and 0.2% for units to 12 July and Melbourne’s drop was 0.9% for houses and 0.2% for units.
Brisbane, Adelaide and Hobart were the only states to experience increases in weekly rents for both houses and units. Adelaide’s house rents increased 1.1% and units by 0.4%, Brisbane’s house rents increased by 1.0% units increased by 0.7%. Hobart’s house rents increased 3.6% and units increased by 4.9% (the highest among all states).
DISTRESSED PROPERTY OF THE WEEK
438 Cross Road, Clarence Park SA 5034
This large 780 sqm allotment in Clarence Park, South Australia, approx. 7 km from Adelaide’s CBD has long been held within the same family and is now for sale to finalise a Deceased Estate. It was passed in at auction in May 2019 and is now selling at $495,000 to $540,000.
It is a 3 bedroom, 1 bath home with a carport and large backyard and should attract a savvy buyer who wants to renovate and further develop this traditional home. It is zoned Residential B200 within the Unley Council Zone, and there are opportunities for developers to utilise the land for higher density living (STCA).
The property is well located close to Emerson railway station, Cumberland Park shopping precinct, schools and cafes. The area has experienced capital growth of 35.5% over 3 years for 3 bedroom houses and has increased 1.9% over the last month. You would expect to pay from $785,000 to $855,000 for houses in postcode 5034. Keep in mind this property needs further renovation.
Unit asking prices have also experienced good growth of 16.4% over 12 months and 10.4% over the month. Investors would be pleased with the 21.1% increase in asking rents over 3 years and 6.1% increase over the month for units. Houses have had more modest rental growth at 1.3% increase over the month after a 19.6% increase over 12 months.
Gross rental yield sits at 3.22% for houses and 5.76% for units for postcode 5034 and vacancy rates are tight at 1.7%. As at June 2019 there were 37 houses and 18 units listed for sale in this area.
This property offers potential for buyers looking for capital growth and good rental returns. Recently the Adelaide market has seen an increase in infrastructure projects, low house stock levels and a modest 1.0% population growth in 2016 which has resulted in steady growth and could continue to drive up prices. Keep monitoring this market’s growth at SQM Research’s free property data at SQM’s website. Also consider the Property Valuation product for more in-depth data and property price estimator.
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