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Rents rise as vacancy rates fall despite talk of property crash

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Struggling households across Australia face further cost of living pressures as tumbling vacancy rates allow landlords to raise rents.

Residential vacancy rates fell across the nation in March, down to 2.3 per cent, at the same time as landlords boosted asking rents for units by 1.6 per cent in Sydney and Melbourne.

The number of Australians with a rental property has increased to just over 2.05 million, up from 1.98 million in 2012-13. The number of Australians with a rental property has increased to just over 2.05 million, up from 1.98 million in 2012-13. Photo: Andrew Quilty

Figures from property research firm SQM Research show Melbourne has the lowest capital city vacancy rate of 1.5 per cent despite gloomy predictions of a massive apartment oversupply in the central city.

Sydney’s vacancy rate fell too, despite high levels of inner-city apartment construction, to just 1.7 per cent across the city and 0.3 per cent in the CBD.

“Vacancies usually drop in the early months of the year as people return to their jobs after the summer break and students go back to universities in March,” SQM managing director Louis Christopher said.

The vacancy figures were likely to rise again in April as demand for rental properties falls away, he said.

Vacancy rates continued to fall in Melbourne, even in apartment oversupply hotspots like Docklands and Southbank.

Falling vacancy rates generally increase pressure on household rents, adding to affordability woes from skyrocketing house prices.

Perth had the nation’s highest vacancy rate, 4.7 per cent, although that was also down marginally from the previous month, SQM said.

Darwin’s, the next highest, fell to 3.5 per cent from 3.8 per cent in February.

Hobart’s vacancy rate was the lowest of all capital cities at just 0.6 per cent.

Property prices have continued to rise in Sydney and Melbourne despite measures by regulators to cool the market amid warnings of the increased risk of a property crash from debt-laden households struggling to pay mortgages.

Annually, asking rents for houses have grown fastest in Melbourne at 7.1 per cent, reflecting tightening vacancy rates.

“Sydney unit rents too jumped by 1.6 per cent over the month, as well as a 1.5 per cent rise for Canberra units, though housing rents fell in those two cities,” SQM said.

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