Vacancy rates rise as first timers opt to buy (or share)
The number of empty property rental homes surged more than 12 per cent last month and the rate of growth in rental asking prices slowed, but experts warned that the apparent easing in the rental housing crisis would be short-lived.
Vacancies nationwide increased for the third consecutive month in April, rising nearly 4000 to 36,785 and lifting the share of empty rental properties to 1.2 per cent, data from SQM Research shows.
But Louis Christopher, manager director of SQM Research, warned the improved conditions would be short-lived, given continuing falls in building approvals and a forecast increase in migration.
The warning comes as the Business Council of Australia called on the Albanese government to establish long-term national dwelling targets tied to forecast population growth.
“We know there is simply not enough new homes being built to meet demand at a time when housing affordability is declining. In fact, new housing supply has been falling over the last half-decade,” said BCA chief executive Jennifer Westacott.
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“There needs to be a clear plan for building new homes and infrastructure that is aligned with the growth in Australia’s population,” she said.
The BCA also urged the federal government to speed up the time it takes to rezone land and approvals for new housing projects and be more innovative in it thinking around build-to-rent to make long-term renting a viable and attractive alternative to home ownership.
On Sunday Treasurer Jim Chalmers refused to be drawn on whether Labor would give in to demands by the Greens to double the size of the $1.6 billion housing and homelessness agreement with the states.
“Obviously [I’m] not going to preempt the conversations that we have with the states and territories or to nominate a number today. We’ve indicated that we will be extending it. We will work in the usual collaborative and cooperative way with the states and territories to get a good outcome here. But that’s not the only element of our housing policy. There is a range of others,” Mr Chalmers told the ABC. The Treasurer also urged the Greens to pass the government’s $10 billion future fund to build low-cost houses.
“It’s time for the Senate to end its political games and get on board,” Mr Chalmers said.
SQM found that in Sydney, the empty rentals jumped nearly 1000 homes to 10,133, in April, a 10.3 per cent increase from the previous month.
Melbourne posted a 15.2 per cent increase to 6430, while in Brisbane the number of untenanted properties rose 12.3 per cent, or 368,to 3374 during the same period.
Share rentals
Mr Christopher attributed the rise in part to tenants grouping together to reduce individual rental costs, and to more people buying properties.
“Tenants are now responding to the skyrocketing rents by grouping together more, which enables them to share the rental burden,” Mr Christopher said.
“There is increasing evidence that people who were once tenants are now turning into first-time buyers to take advantage of the grants on offer, such as the generous stamp duty relief in NSW,” he said.
Data from share accommodation website Flatmates.com.au shows the number of people looking to share a rental home climbed 38 per cent over the year to April, while the number of rooms listed for rent jumped 52 per cent.
The ballooning share of available rental properties sparked a rise in the vacancy rate, albeit by just 0.1 of a percentage point in the biggest capital cities.
Vacancy rates rose to 1.4 per cent in Sydney, they lifted to 1.2 per cent in Melbourne and increased to 1 per cent and 1.1 per cent in Brisbane and Darwin respectively.
First home buyers surge
The easing vacancies coincided with the large jump in first home buyer lending, which climbed 15.8 per cent in March, according to the Australian Bureau of Statistics.
“We’re seeing a lot of first home buyers seeking pre-approval because they believe that the market is at or close to the bottom,” said Otto Dargan, chief executive of mortgage brokerage Home Loan Experts.
“I think we’ll see sustained interest from first home buyers for some time as there are many people who have wanted to buy in the last year that have delayed that decision combined with many renters getting fed up with rising rents.”
The rise in vacancy rate sparked a sharp slowdown in asking rents in April compared to the previous month.
Nationwide, rents increased by 1.4 per cent over the month, nearly half the 2.6 per cent monthly increase recorded in March.
Mr Christopher said while rental increases had started to slow, tenants were still facing stiff competition as supply failed to match demand.
“We still have a rental crisis, particularly in our two biggest capital cities, so tenants will continue to see higher rents in the foreseeable future,” he said.