The Weekend Australian
Edition 1 - SAT 17 JUN 2006, Page 003
By Anthony Klan

RENTAL vacancy rates have fallen in almost all capital cities as renters scramble for accommodation and force up rents.

Vacancy rates plummeted in Sydney, Melbourne and Brisbane in the March quarter as investors continued to avoid the floundering property market, exacerbating the shortage of rental properties.

Vacancy rates for Sydney and Brisbane each fell 0.6 of a percentage point in the period, to 2 per cent and 1.5 per cent respectively.

The figures, compiled by the Real Estate Institute of Australia, show Melbourne had a vacancy rate of 1.8per cent, down 0.3 of a point.

The Housing Industry Association said the vacancy figures reflected poor housing affordability, with many long-term renters unable to enter the property market.

``As long as people are locked out of the housing market and not being able to afford a home, the situation is not going to get any better,'' said HIA executive director of housing and economics Simon Tennent.

But the vacancy figures presented some good news for landlords, with rents on the rise. ``There is easily another two years of rents climbing,'' Mr Tennent said. ``If the market is very tight and land taxes and rates are increasing, there's every reason landlords would be putting rents up.''

Apartments recorded the strongest growth in the quarter, with the average weekly rent for a Brisbane unit rising 8.7 per cent to $250 a week, up 11per cent for the year.

Rental growth was more moderate for apartments in Melbourne and Sydney, with annual rents up 4.5per cent and 3.4 per cent respectively.

The resources-led Perth market continued to lead the country, with apartment rents soaring 29.4 per cent in the year to March.

Australian Property Monitors research director Louis Christopher said Sydney rents were expected to rise by between 6 per cent and 8 per cent for the next two years. Property analyst Michael Matusik of Matusik Property Insights said Brisbane rents were expected to rise by up to 15 per cent this year before flattening off.

According to PRDnationwide, the best rental returns for apartments were to be found within 5km of the CBDs of capital cities. Conversely, the best rental returns for houses were to be found in the outer suburbs.

The REIA said occupancy levels in Adelaide and Hobart remained constant in the three months to March.

The great rent squeeze -- Weekend Primespace liftout

TIGHT MARKET
Rental vacancy rates,
March quarter
...............      %...... Quarterly change
Darwin ........ 3.3 .... -1.1
Canberra .....1.8 .... -1
Brisbane ..... 1.5 .... -0.6
Sydney ....... 2.0 ...... -0.6
Melbourne ...1.8 .... -0.3
Perth .......... 1.4 .... -0.2
Adelaide ..... 1.7 ... 0
Hobart .........2.2 ... 0

Source: REIA

© Copyright. All rights reserved. Most articles on Newstext are copyright News Limited. Some copyright is owned by third parties. You may read this article on-screen or print it once for your own personal use.