Vacancy rates fall despite increasing housing supply

Vacancy rates fall despite increasing housing supply

Australia’s new housing supply is still yet to catch up with demand in many capital cities, according to new figures from SQM Research.

The report shows that residential vacancy rates across Australia fell to an average of 2.2% in May, down from 2.4% in April 2017. In May 2016, the national average vacancy rate was 2.4% also.

SQM vacancy rates:

City May 2016 April 2017  May 2017
Adelaide 2% 1.9% 1.8%
Perth 4.7% 4.9% 4.8%
Melbourne 1.9% 1.6% 1.5%
Brisbane 2.7% 3.3% 3.1%
Canberra 1.1% 1% 1%
Sydney 1.6% 1.8% 1.8%
Darwin 2.9% 3.4% 3.2%
Hobart 0.8% 0.6% 0.6%
National 2.4% 2.4% 2.2%

Melbourne recorded a fall in vacancy rate from 1.6% down to just 1.5%, a 7-year low for the city, despite the supply of new apartment housing coming onto the market. At the same time last year, Melbourne’s vacancy rate was 1.9%.

Similarly, Sydney’s vacancy rate remained at a consistently low 1.8%, following a vacancy rate of 1.6% in May last year. According to SQM, Sydney’s high levels of inner-city apartment construction are being largely absorbed by higher than expected population growth rates.

The only eastern capital city to buck this trend was Brisbane – while its vacancy rate fell to 3.1% in May from 3.3% in April, this is still a significant increase from the 2.7% recorded in May 2016. SQM credits this vacancy increase (along with a drop in asking rental growth rates) to the city’s supply of new units.

Australia’s tightest rental market remains Hobart, with a stable vacancy rate of just 0.6%, down from 0.8% last year.

The higher vacancy rates in Darwin and Perth than at the same time last year can be partially attributed to the mining downturn, which SQM also cites as a factor contributing to falling asking rents in these cities.

Increasing housing supply is one of the federal government’s strategies for tackling the issue of housing affordability in Australia’s most popular locations, with the 2017 budget including several measures to increase the number of available houses in Australia’s capitals.

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Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

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Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

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The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

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A fixed rate is one which is set for a period of time, regardless of market fluctuations. Fixed rates can be as short as one year or as long as 15 years however after this time it will revert to a variable rate, unless you negotiate with your bank to enter into another fixed term agreement

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Variable rate

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The fastest way to find out what the lowest interest rates on the market are is to use a comparison website.

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