STRONG net migration into Australia combined with continuing weakness in the housing sector has contributed to one of the nation's worst rental shortages.
Tightening vacancies were most pronounced in the eastern capitals. This is good news for investors, many of whom are still struggling to make a decent yield on properties bought during the property boom. Conversely, the tightening market will place more pressure on renters - many of whom have been locked out of the market by high prices for entry-level properties caused by the property boom and negative gearing laws.
Housing Industry Association chief economist Harley Dale said the combination of historically high immigration levels and a downturn in construction levels would cause more rent hikes next year. "Each year there are an extra 80,000 to 90,000 people looking for accommodation because of historically high immigration, which puts pressure on rents," Mr Dale said.
Vacancy levels in Sydney fell 0.6 percentage points to 1.7 per cent in the September quarter and Brisbane vacancy levels fell half a percentage point to 1.7 per cent. Canberra had the tightest rental market in the country with the vacancy rate falling 0.9 percentage points to a tiny 1.1 per cent - well below the national long-term vacancy rate average of 3per cent.
The only capital city to record an increase in vacancies was Perth, which has undergone a surge in construction on the back of the China-led resources boom.
The REIA said low vacancy rates indicated strong rental growth would continue in coming months, especially if interest rates continued to rise. Perth recorded the highest rental growth in the year to September - at 18 per cent - followed by Brisbane and Melbourne at 16 per cent and 9 per cent respectively.
