It may be the calm before the storm for Canberra’s rental market, as it softened in the last quarter of the year with vacancies up on the same time last year and rents in some areas falling though still remaining the highest in the country.
But the seasonal dip in demand and rise in vacant properties due to workers and students leaving the capital is due to end as they return in force, including international students from China.
Two sets of data for December confirm the improved vacancy rate – CoreLogic saying 1.6 per cent and SQM Research a little higher at 1.9 per cent after a long period at 1 per cent or lower.
SQM says in December there were 1129 vacancies compared with 689 in 2021.
CoreLogic says the median weekly rent also fell in December to $681, down 0.7 per cent for the quarter and bucking the national trend but still 4 per cent up for the year.
In fact, rents nationally increased 10.2 per cent in 2022, a record high for annual rent growth.
House rents in Canberra fell the most, down 0.8 per cent, and units hardly moved, down 0.2 per cent.
Core Logic says Canberra rents have fallen a cumulative 1.1 per cent since peaking in June, following a trough-to-peak upswing of 18.1 per cent from September 2020.
But SQM has the median rising 2.6 per cent to $667 for the month ending 12 January, a 7.1 per cent increase for the year.
It reports that in some suburbs such as Belconnen rent increases have been in double figures.
Director of Property Management at The Property Collective and REIACT President Hannah Gill told Region that cyclical and seasonal factors were at play but the improvement in vacancy rates was cold comfort given they still reflected an unhealthy market.
Ms Gill said the difference was hardly noticeable when rates had gone from a “ridiculously exceptional low vacancy rate to a bit of a less ridiculously low vacancy rate”.
“It’s still very much in investors’ favour in terms of a lack of supply and the fact that this drives up rents or holds them steady,” she said.
Ms Gill said a vacancy rate of 2 to 3 per cent would be acceptable, but Canberra has not had that kind of market in years.
She also doubted that rents had fallen much or at all, although the pace of increases may have eased.
“We’ve been in a holding pattern for the final quarter of 2022 and into the new year we’re going to see it tighten again,” Ms Gill said.
That was already starting, with her agency receiving half a dozen strong applicants for every property.
“How do you choose? Flip a coin?” Ms Gill said.
Ms Gill said any new stock – mainly apartments – came in short bursts and were quickly snapped up and older houses might soon become scarce.
The high rental yields would be attractive to investors particularly in apartments but the unknown factor for houses was how investors would respond to the new minimum standards for energy efficiency requiring ceiling insulation to be installed.
“Even with the interest-free loans a lot of the investors just aren’t interested,” Ms Gill said.
“I suspect we’ll see from April onwards some of that stock will hit the market.”