The recent release of the REINSW December quarter Property Profile report has revealed a tighter rental market towards the end of 2012, a trend that we seen continue into 2013. There is no doubt that demand for rental properties is picking up across the state, with Sydney’s rental vacancy rate in the December 2012 quarter at 1.9 per cent. This figure was down 0.6 per cent from the previous quarter; however it was also 0.3 per cent higher than in December 2011. So, with the competition for rental accommodation heating up, how is the rental market faring?
Vacancy rates tighten
As explained in the REINSW Property Profile Report, rental vacancy rates measure the proportion of residential properties vacant and available for rental at a point in time, and vacancy rates represent a traditional measure of market vitality.
According to the report, the availability of vacant properties across the overall Sydney metropolitan rental market worsened over the quarter from a vacancy rate of 2.5 per cent in September 2012 to 1.9 per cent in December 2012. While there was some fall back from the September quarter highs, the vacancy rate for Sydney still finished the year 0.3 per cent higher than the 1.6 per cent of December 2011.
The vacancy rate for the inner suburbs of Sydney (0-10km from the CBD) remained below the 2 per cent benchmark considered to be the effective minimum at 1.8 per cent in December, down 0.1 per cent since September 2012, but up 0.3 per cent over the last 12 months.
The middle suburbs (10-25km from the CBD) recorded a vacancy rate of 2.3 per cent in December 2012, falling back after pushing through the 3 per cent mark in August 2012 but still up 0.3 per cent since December 2011.
The outer suburbs of Sydney (more than 25km from the CBD) dropped dramatically from 3.0 per cent in September 2012 to finish the year at 1.8 per cent. However this was still up 0.4 per cent from the 1.4 per cent recorded in December 2011.
Mixed results for the regional market
The performance of the rental market across regional NSW over the last 12 months has once again been mixed.
In Newcastle, the rental vacancy rate in December 2012 was 1.6 per cent, which is up from 1.4 per cent in September 2012 and 1.1 per cent in December 2011. In contrast, the rental vacancy rate in Wollongong was 2.5 per cent in December 2012, down after hovering around the 3 per cent mark between March and August 2012.
Other regional markets continued to experience a tight rental market, with vacancy rates in the Murrumbidgee, Northern Rivers and Riverina areas all substantially down on their levels of 12 months ago. However, other areas such as the South Coast and the Mid North Coast have experienced steady increases.
According to Christian Payne, President of REINSW, the residential rental market has contracted during February 2013, in line with expectations. “The market will continue to tighten due to the lack of supply caused by the Government’s failure to provide appropriate incentives to invest in property market.
“This dire situation will not resolve itself. We need action today from the Government to address the inadequate, expensive and complex planning system, and an inequitable property tax regime.
“If not remedied, the crisis will continue to have significant negative impacts on the future prospects of NSW both economically and socially,” Mr Payne said.
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