Australia is currently grappling with a rental crisis, which experts warn may worsen in the coming months.
Recent data from PropTrack has found a significant decline in the availability of rental properties nationwide, with the share of vacant rentals declining over the past three years. From January 2021 to January 2024, the vacancy rate dropped from 2.42% to 1.09%.
PropTrack economist Anne Flaherty (pictured above) said this drop in vacant rentals was evident across the majority of Australia, with 98% of the statistical area 4 (SA4) regions witnessing a reduction in vacancy rates since the onset of the global pandemic.
SA4s represent geographical areas with a minimum population of 100,000 people, Flaherty said. A healthy vacancy rate usually hovers around 3%, striking a balance between available rentals and tenant demand. However, in January, only 2% of SA4 regions were able to maintain vacancy rates above this threshold.
The Bunbury region in Western Australia recorded the lowest vacancy rate nationwide in January, with only 0.45% of rental properties vacant. This marked the seventh consecutive month that Bunbury boasted Australia’s lowest vacancy rate. Following closely were Queensland’s Sunshine Coast and Melbourne Outer East, with vacancy rates of 0.58% and 0.6% respectively.
While low vacancy rates persist in both capital cities and regional areas, cities have experienced the most significant decline in availability over the past year, according to Flaherty.
Greater Perth emerged as the toughest rental market, with a vacancy rate of just 0.76% in January. Similarly, Greater Adelaide and Greater Brisbane reported vacancy rates below 1%, at 0.78% and 0.86% respectively.
Regional Queensland recorded the lowest vacancy rate outside of capital cities at 0.95%, closely trailed by regional Tasmania at 0.97%.
“The growing prevalence of sub-1% vacancy rates across Australia’s capital city and regional areas is extremely concerning and points to a severe undersupply of homes relative to tenant demand,” Flaherty said in her analysis.
According to Flaherty, there may be “little relief” in the near future as the pace of new housing development in Australia slows to its lowest level in a decade and population growth remains strong.
“This will maintain competitive conditions in both the markets to rent and also to buy,” she said. “Consequently, rental availability is likely to deteriorate further over the year which will erode affordability. We are also likely to see the average household size increase as more look to move into share houses or stay longer in the family home.”