National vacancy rate tipped to push 3 per cent by the end of the year

Property Investor

Despite a small dip in March, the national vacancy rate has been tipped by SQM Research to push the 3 per cent threshold by the end of the year.

If the vacancy rate does break the 3 per cent figure it will be the first time since 2005, driven by the looming federal election uncertainty and rising construction completions.

The uncertainty surrounding the election is based on possible changes to negative gearing and capital gains tax laws if Labor win.

The other factor is that construction completions during this year will rise which lowers the price of rent as more supply comes onto the market.

SQM Research managing director Louis Christopher spoke to the Australian Financial Review about the forecast.

“For the record, Australia’s national vacancy rate has not exceeded 3 per cent since SQM Research began collating vacancy rate data in 2005,” he said.

“With Sydney’s vacancy rate already hovering at 3.1 per cent, Darwin at 3.7 per cent, Brisbane and Perth not too far behind this mark with new construction completions set to rise over 2019, this may well become a reality towards the end of the year.”

In Melbourne, the vacancy rate fell by 0.1 percentage point from February to March, now sitting at 1.6 per cent.

BIS Oxford Economics managing director Rob Mellor said the excess supply in Melbourne was being offset by strong population growth.

“If you asked anybody three years ago, you would’ve thought Melbourne was the market that had a risk of excess supply,” he told AFR.

But Mr Mellor said it was Sydney more than Melbourne where vacancy rates have blown out more in the last year.


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