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Nationwide vacancy rate hits highest level in 10 months

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The latest national rental vacancy figures suggest there may be a silver lining in a badly contracted market.

The percentage of properties available to rent increased further in May, marking the third consecutive month of improvement in the national rental market, according to PropTrack.

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The national vacancy rate rose 0.08 percentage point to 1.3 percent, but remains well below what is considered a healthy level of supply.

But while availability remains scarce, the latest data showed three consecutive increases in vacancies not recorded since late 2020, suggesting the market is moving in the right direction.

Sydney and the ACT recorded the largest increases in rental vacancy rates in May, rising by 0.16 percentage points and 0.18 percentage points respectively.

Meanwhile, Perth recorded the largest increase over the past three months, with vacancy rates rising by 0.40 percentage points.

However, all Australian state capital cities except Canberra remain with lower vacancy rates than before the COVID-19 pandemic began.

Adelaide and Brisbane remain the most challenging rental market conditions, although some easing was seen in May.

The local market saw an increase of 0.02 percentage points, lower than the national average, but this will still be good news for renters, as the local vacancy rate stands at 1.26 percent.

Paul Ryan, senior economist at PropTrack and author of the report, said while these figures are good news for renters, the reality means competition remains fierce.

“While the relaxed conditions will be welcomed by renters, available properties remain very scarce and vacancy rates are roughly half of what they were pre-pandemic. This means competition for rentals remains strong and rents will continue to rise,” Mr Ryan said.

“The easing of conditions over the past three months has been most evident in Perth, Sydney and the Australian Capital Territory, with Perth seeing significant improvement after recent very challenging conditions.

“Vacancy remains low across all markets, however Adelaide and Brisbane are experiencing the toughest conditions for renters, with rental vacancy rates of 1.03% and 1.11% respectively. In these markets, renters expect renters to continue to struggle to secure rental space for the remainder of 2024, resulting in significant rent increases,” Mr Ryan said.

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