Canberra's rental market is experiencing a significant shift, as indicated by the latest report on vacancy rates. According to Domain Vacancy rates: May 2023, the capital city recorded a record-high vacancy rate of 1.8 percent, surpassing other major cities in Australia. This increase in available rentals is accompanied by a doubling of listings compared to the previous year. These changes in the rental landscape are driven by factors such as rising living costs and tenants exploring alternative housing options like sharehouses.
Rising Costs and Rental Prices: Canberra's median rent prices remain on the higher end of the scale, with houses commanding an average of $690 per week and units averaging at $550 per week. This makes the city the most expensive in terms of renting a house and the second most expensive for renting a unit, just after Sydney. As living costs continue to rise, some individuals are opting to downsize or seek more affordable housing options.
Vacancy Rates Across Canberra Regions: Analyzing vacancy rates across different regions in Canberra, it is interesting to note that Molonglo Valley leads with a rate of 2.6 percent, followed closely by Woden Valley at 2.4 percent. The Inner North and the Inner South share the same vacancy rate of 2.2 percent. These figures suggest a relatively balanced market in these regions, while other areas like Gungahlin and Belconnen are experiencing higher demand due to their more affordable housing options.
Market Dynamics and Tenant Opportunities: The current rental market situation in Canberra resembles a tenant's market, characterized by increased bargaining power for renters. This shift can be attributed to various factors, including limited growth in public hiring and reduced immigration to the city. Landlords have witnessed longer periods of true vacancy, with properties remaining unoccupied for 11 days in April 2023, compared to an average of 2-5 days over the past two years. This indicates a decline in demand and increased competition among rental properties.
Looking Ahead: The outlook for Canberra's rental market is expected to evolve as the year progresses. The recently announced budget and clarity regarding government department spending may lead to an influx of individuals relocating to the capital city for job opportunities. However, the challenges posed by high rents in comparison to other cities and regional areas continue to affect the influx of new residents.
With Canberra's vacancy rates at a record high and rental competition reduced, tenants now have the opportunity to explore a wider range of options and negotiate favorable rental terms. The shifting dynamics in the rental market offer an advantageous position for prospective renters, while landlords may need to adapt their strategies to attract tenants in this changing landscape. As the year unfolds, it will be interesting to observe how the market responds to evolving economic conditions and whether there will be a resurgence in demand for rentals in Canberra.