The share of properties available to rent in Australia has hit a record low after the national vacancy rate recorded its largest drop in over a year, a new report has revealed.
Rental vacancy rates fell 0.14 percentage points in August to hit a new low of 1.10%, with the share of rental properties on the market now 54% lower compared with pre-pandemic levels, the report by property data firm PropTrack shows.
The data come as advocates for housing affordability argue that without government intervention, the crisis will become more severe.
PropTrack economist and report author Anne Flaherty said there was “a host of drivers” that have led to the tight vacancy rate, including a growing population, the number of people in each dwelling falling and first home buyers being increasingly locked out of the market.
“For renters who may be looking to be first home buyers, they’ve faced a situation where because of interest rate rises, they can borrow 30% less on average,” Flaherty said. “But at the same time, property prices are still sitting as high as ever.”
Housing affordability has now hit its worst level in at least three decades, according to PropTrack. Households earning a median income of just over $105,000 can afford the smallest share of homes since 1995 when records began, at just 13% of homes sold in the past year, a report from PropTrack revealed last week.
“The amount homebuyers are having to save is incredibly high,” Flaherty said. “Those mortgage repayments are very, very high and the amount that they can borrow is less. So that’s also keeping people in the rental market longer.”
The supply of vacant rental properties in regional areas has also deteriorated, with the vacancy rate falling to just 1.1%.
“Rents are predicted to continue rising off the back of these incredibly low vacancy rates, which are driving up competition for properties,” she said. “But if rents reach high enough, it might lead to a tipping point for some tenants where the amount they would be paying in mortgage repayments would be less than their rent.
“So I think that when we start to see that happen, that could lead to a bit of a shift.”
Maiy Azize, a spokesperson for the housing affordability advocacy group Everybody’s Home, said the low vacancy rates proved “only the federal government can create affordable rentals for the people who need them, when and where they need them”.
“For years governments have been walking away from social housing, relying on the private sector to deliver affordable homes,” Azize said. “These numbers show that’s a dangerous approach.
“Australia’s social housing shortfall is massive. We need to create 25,000 new social homes across the country every year. We’re calling on the government to act now and end the shortfall for good.”