Despite the influx of first homebuyers, vacancy rates across the country have held steady according to an independent researcher.
SQM Research said nationwide city rental vacancy rate stands at 3.5% in March with Sydney recording the highest vacancy rate at 4%. Strong rental demand have made Perth and Canberra the tightest rental markets in the country with vacancy rates at just 1.1%.
Louis Christopher, SQM Research founder and head of property with ratings house Adviser Edge noted that there have been a number of similar patterns with regard to vacancy rates.
"Vacancy rates overall have been very steady so far this year. We had been expecting a rise in vacancy rates to occur due to over 40,000 renters turning themselves into first homebuyers. But to date, the influx hasn't hit the markets as hard as we thought it might. We are still recording higher vacancies in the inner urban areas compared to outer suburban locations for most capital cities.
Christopher noted that the upper end properties are struggling to be rented out in what appears to be a collapse in demand from executives and expatriates, while the affordable end, there is still considerable tightness with a large number of cheaper localities recording vacancy rate under 2%.
"Clearly, upper end property investors are facing the harsh reality of property value declines and falling rents. This should not really be a surprise to anyone given that we are in a recession. The upper end of the property market has always been very discretionary based. However, what this means is that resources should be deployed to encourage developers to build at the affordable end of the market where historically, there has been minimal returns for them," he said.