According to the latest report, Australia's rental vacancy rate has reached 1.42%, with Sydney and Melbourne experiencing the highest rates at 1.68% and 1.5%, respectively.
Economists point out that the primary reason for the increase in vacancy rates is heightened investor activity, leading to an increase in the number of properties available for rent. Despite the rising vacancy rates, the inability of new housing construction to keep pace with population growth suggests that the long-term supply shortage in the rental market may persist in the coming years, particularly in Western Australia, Queensland, and New South Wales, where shortages of new housing are particularly acute.
The overall vacancy rate in remote areas of Australia is 1.31%, with South Australia's remote areas recording the lowest vacancy rate at 1.22%. Since March 2020, national rental vacancy rates have decreased by 43%. However, the number of properties for sale has decreased most significantly in Sydney, Perth, and Darwin, with declines of 49%, 50%, and 76% respectively over the past four years.
Property prices in remote areas of Western Australia, South Australia, and Queensland have dropped by 60%, 52%, and 48% respectively. According to the latest data from the Australian Bureau of Statistics, net overseas migration reached 547,300 people in 2023, further increasing housing demand pressure.
Analysis from Prosper Australia's water meter data shows that Melbourne's housing vacancy rate reached 5.2% in 2023, with approximately 1.5% (27,000 units) of homes completely vacant. Including residences where average single-person water usage is less than one-fourth, nearly 100,000 homes across the city are vacant, representing one-twentieth of the total housing stock. This is equivalent to two and a half years of new housing construction, enough to provide two homes for everyone on Victoria's public housing waiting list.
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These data illustrate that a significant number of vacant homes during the rental crisis is a serious waste of resources and reflects an unequal situation. The massive imbalance between supply and demand continues to drive average weekly rents upwards, with the national average rent for apartments currently at 584 AUD, an increase of 9.8% from last year. State and federal governments are actively working to correct the imbalance between housing supply and demand.
In Victoria, the government is increasing the Vacant Residential Land Tax (VRLT) to combat long-term vacant properties. The Victorian government announced in May that starting January 1st next year, VRLT will be levied if a property in Victoria has been vacant for more than six months in the previous year. This policy currently applies only to inner and central Melbourne. Increasing tax rates will also apply based on the number of consecutive years a property remains vacant. The Victorian government hopes that this policy will encourage landlords to rent out vacant properties, thereby easing pressure on the rental market.
Tim Pallas, Treasurer of Victoria, said, "We know Victorians need more housing, and by tackling vacant properties, we are working to alleviate housing pressures across the state." He further explained, "Increasing the Vacant Residential Land Tax will encourage landlords to lease their vacant properties, increase housing supply in the rental market, and lower rental prices."
Despite the rise in vacancy rates, Australia's rental market continues to face challenges of supply shortages and rising rents. Government policy interventions and increased construction of new housing are key to addressing these issues. In the future, with the implementation of various policies and gradual market adjustments, the rental market is expected to return to balance.
Moreover, factors such as supply shortages and immigration growth contribute to further tightening of the rental market. National and local governments need to formulate more effective policies to address these challenges and ensure the stability and healthy development of the rental market. Only through multifaceted efforts can the pressure on the rental market be truly alleviated, allowing more Australians to find suitable living spaces.
