{"id":14152,"date":"2017-10-05T01:00:59","date_gmt":"2017-10-04T14:00:59","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=14152"},"modified":"2017-10-05T01:00:59","modified_gmt":"2017-10-04T14:00:59","slug":"vacancies-and-what-it-means-to-investors-louis-christopher","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/vacancies-and-what-it-means-to-investors-louis-christopher\/","title":{"rendered":"Vacancies and what it means to investors \u2013\u00a0Louis Christopher"},"content":{"rendered":"

Data released by SQM Research has revealed that the number of national residential rental vacancies was just over 71,000 in August, giving a national vacancy rate of 2.2%.\u00a0 Down slightly on previous reports but what does that mean for property investors? Louis Christopher<\/strong> from SQM Research discusses that with us.
\nTranscript:<\/strong>
\nKevin:\u00a0\u00a0<\/strong>Data released by SQM Research this week revealed that the number of national residential rental vacancies was just over 71,000 in August, giving a national vacancy rate of 2.2%, down slightly. What does that mean for property investors? Joining me to talk about this, Louis Christopher from SQM Research.
\nLouis, thank you for your time.
\nLouis:\u00a0\u00a0<\/strong>Good day there, Kevin.
\nKevin:\u00a0\u00a0<\/strong>Is this good news?
\nLouis:\u00a0\u00a0<\/strong>For existing property investors, yes. I must state that it is still a mixed market out there. We still recorded some elevated vacancies in Perth, but overall, most capital cities actually recorded a decline, and overall, I would say that the market moderately is a landlord\u2019s market.
\nKevin:\u00a0\u00a0<\/strong>When you look at Hobart, I think you\u2019ve recorded 0.4%. That\u2019s a pretty tight market.
\nLouis:\u00a0\u00a0<\/strong>That\u2019s the lowest vacancy result we\u2019ve recorded for any capital city since our records began. Yes, things are really tight in Hobart. It\u2019s a very strong landlord\u2019s market. We\u2019re recording some big rises in rent there, as well.
\nKevin:\u00a0\u00a0<\/strong>That always does happen.
\nSo, across the nation, 2.2%. Would you say that that\u2019s definitely in favor of landlords?
\nLouis:\u00a0\u00a0<\/strong>Yes. Moderately in favor of landlords, but it varies when we speak of each individual city. Perth, for example, is recording a vacancy rate of 4.6%, so that\u2019s still a tenant\u2019s market, though I note the vacancy rate is starting to tighten after years of rises following the mining downturn. Then Hobart we\u2019ve just mentioned before is 0.4%.
\nWhen we look at the big capital cities such as Brisbane, which we have at 3.1%, I would say that\u2019s moderately in the tenant\u2019s favor. In Sydney, at 2%, that\u2019s very modestly in the landlord\u2019s favor. And then when I look at Melbourne at 1.7%, that\u2019s definitely a landlord\u2019s market there.
\nKevin:\u00a0\u00a0<\/strong>Obviously from what you\u2019re saying, I can take that the tipping point is around 2%.
\nLouis:\u00a0\u00a0<\/strong>Yes. Look, we put guidance out there that a market that\u2019s in equilibrium is somewhere between 2% to 3%, but it also depends on the relative direction. So, if the market is tightening \u2013 if you\u2019re seeing vacancy rates fall form, say, 5% to 3% \u2013 I would suggest to you that\u2019s a market increasingly turning towards landlords even though the absolute number is still 3%.
\nAnd vice versa, if you see a city where the vacancy rates go from, say, 1% to 2%, the mere fact that they\u2019re rising means that it\u2019s increasingly becoming a tenant\u2019s market and it becomes more difficult for landlords to increase the rent.
\nKevin:\u00a0\u00a0<\/strong>If you look at, say, Brisbane as an example, the vacancy rate dropped from 3.3% to 3.1%, but still a lot of vacant properties \u2013 almost 11,000 \u2013 when you look at how many there are in Sydney, 12,700.
\nLouis:\u00a0\u00a0<\/strong>Yes, that\u2019s exactly right. There\u2019s still a lot of stock in Brisbane to absorb, particularly the inner-city apartment market where everyone knows now we\u2019ve had a major over-supply issue for a number of years. So yes, Brisbane still has some stock to absorb before there will be any real rental pressure there.
\nThat said, though, it depends which area in Brisbane we look at. If we look at, say, Wynnum\/Manly we\u2019ve seen fairly tight vacancy rates, well under 3%, and that is a local market there that is favoring landlords.
\nKevin:\u00a0\u00a0<\/strong>Another stat that I\u2019d like to look at in your report is the asking rents. You mentioned there about Hobart and how it\u2019s climbing rather dramatically, obviously. What are you seeing around Australia in terms of asking rents? How are they going?
\nLouis:\u00a0\u00a0<\/strong>Once again, it depends on each city. Yes, in Hobart, rents are up 14.5% from 12 months ago.
\nKevin:<\/strong>\u00a0 Wow. That\u2019s big.
\nLouis:<\/strong>\u00a0\u00a0If you were a tenant there or you\u2019re looking to try and lease a property, that\u2019s a really tough and tight market to lease into right now.
\nOn the other hand, when we look at, say, the Perth rental market, Perth rents have fallen by about 6.5% over the last 12 months, and the total accumulated falls from their peak back in 2013, is some 33%. So, a heavy tenant\u2019s market there in Perth, as discussed before.
\nYes, it does vary from city to city. One market that seems to be starting to accelerate again in terms of rent is Canberra. Canberra rents are up 6.8% for houses, 4.2% for units over the last 12 months, and also has recorded a very strong monthly rise of over 1% just for the month. So, that\u2019s a market that was a tenant\u2019s market about two years ago, and it\u2019s definitely switched around now to being a landlord\u2019s market.
\nKevin:\u00a0\u00a0<\/strong>Interesting when you look at the national figure, houses compared to units and then you look at the cap city figure. They\u2019re a mirror reverse in terms of growth in the asking rents, aren\u2019t they?
\nLouis:\u00a0\u00a0<\/strong>Yes, that\u2019s exactly right. The national results, units seem to be performing a little bit better than houses right now on a yearly basis. When we look at the capital city result, houses have been doing better than units on a yearly basis.
\nI think the national result has been influenced by the regional townships, because we\u2019re covering the whole country including the agriculture-based townships, the mining towns, the regional areas such as the Gold Coast, and that market is recording more modest increases in rents, and I think the result has been dragged down by the downturn in the mining towns, etc.
\nThe capital city rents, of course, are just a little bit above the CPI at the moment, so the capital cities are delivering rent rises above inflation at this point in time.
\nKevin:\u00a0\u00a0<\/strong>When you look at the cap city average, obviously what\u2019s holding the units back from houses would have to be that potential over-supply of units in those inner-city areas.
\nLouis:\u00a0\u00a0<\/strong>Yes, correct. Particularly Brisbane, which has been holding it back. There have been a few years in the past that Melbourne and Sydney would have an over-supply of apartments in the inner-city areas. That hasn\u2019t materialized for those cities, and I think the reason why that has not actually really materialized is the faster than expected population growth rate for those two capital cities over the past 12 months.
\nMelbourne has been rising at 2.4% per annum, Sydney at 1.7% per annum. For those two cities, that\u2019s basically the size of an Olympic stadium each and every year in terms of their population increase, and that\u2019s what\u2019s actually absorbed the additional stock that has come into the market.
\nSo, there has been more supply in those cities, but given the excessive population growth rates, all that additional stock has been absorbed.
\nKevin:\u00a0\u00a0<\/strong>To see the report for yourself, go to Louis\u2019s website, SQMresearch.com.au. Louis Christopher has been my guest.
\nLouis, thanks again for your time.
\nLouis:\u00a0\u00a0<\/strong>Thank you, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

Data released by SQM Research has revealed that the number of national residential rental vacancies was just over 71,000 in August, giving a national vacancy rate of 2.2%.\u00a0 Down slightly on previous reports but what does that mean for property investors? Louis Christopher from SQM…<\/p>\n","protected":false},"author":176692471,"featured_media":14153,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,22,25,27],"tags":[101],"class_list":["post-14152","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\nVacancies and what it means to investors \u2013\u00a0Louis Christopher - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/vacancies-and-what-it-means-to-investors-louis-christopher\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vacancies and what it means to investors \u2013\u00a0Louis Christopher - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Data released by SQM Research has revealed that the number of national residential rental vacancies was just over 71,000 in August, giving a national vacancy rate of 2.2%.\u00a0 Down slightly on previous reports but what does that mean for property investors? 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