The most recent figures released by the REIV suggests that presently a 3.1% vacancy rate is present in the Melbourne market place at the moment.
Looking closer into the city centre it’s currently reported that 3.9% of property 0 – 4km of the CBD is vacant while 3.6% of property sitting within 4 – 10km of the CBD is also vacant.
The figures are collected from Real Estate Companies by way of survey and the proportion of vacant property sitting on their rent rolls.
This is a rather profound shift and it’s one of the highest vacancy rates I’ve seen for some time. It’s important to note that this rate is for a given month. However if we look at the data below then we see some interesting things:
0 – 4km of CBD : 1.2%
4 – 10km of CBD : 1.5%
0 – 4km of CBD : 0.9%
4 – 10km of CBD : 1.3%
Present: June 2011
0 – 4km of CBD : 3.9%
4 – 10km of CBD : 3.6%
So what’s the cause?
This time of year is generally a tougher slog for the rental market, however it doesn’t help explain the present statistics. In fact the past few months of data shows some real concerns for landlords on the horizon.
My initial thoughts are a combination of factors:
We see plenty about the fact that we’re under supplied when it comes to housing. I think in past times gone by, this might have been the case. However I think we are in a different situation now. We’ve overbuilt in the past few years, and we’ve overbuilt the wrong type of accommodation.
- 2. Population growth is slowing
Melbourne’s population has started to slow, yet new projects and developments have only grown.
- 3. Prices has stagnated and fallen in many instances
As prices have softened, this has led many owners forced to rent their property out rather than sell it.
- 4. International student levels have dropped off
International students aren’t coming in the same numbers as previous years. High Australian dollar plus other reasons.
- 5. Staying at home longer + Sharing of space
A shift of youngsters staying home longer is evident plus those seeking to share accommodation.
- 6. No one wants to live in a box
Too much of what’s been built plus what’s going through construction at present, is not the type of accommodation people want to live in. People live in ‘a box’ when the market is so tight that they don’t have a choice. Bring choice into the market and this stock gets absolutely left behind.
Now we are still seeing strong demand for the good stock, and I don’t think this will change. Yet some big shifts are happening is this section of the market and it’s looking a little better for renters rather than landlords.