The national vacancy rate has plummeted to a record low of 0.7 per cent, although there does appear to be less competition among tenants, according to the latest figures from Domain.

According to the Domain Rent Report for February, the national vacancy rate has dropped 0.1 per cent from the January figure of 0.8 per cent.

Driving the record low vacancy rate is rapid population growth, a slow construction sector and rising property prices.

However, the Domain data shows that, on a national level, the average views per rental listing decreased last month and remained lower compared to the previous year.

This trend was also witnessed in January.

Domain Chief of Research and Economics Dr Nicola Powell said while the record low vacancy rate was worrying, there were some green shoots of hope.

“While the vacancy rate hits a record low, it’s crucial to consider the bigger rental market picture,” she said.

“The number of prospective tenants per rental listing is easing, indicating falling competition between renters. 

This supports the trend of slowing rental growth, suggesting demand is pulling back. 

“This could be an early indicator of an increase in vacancy rates sometime this year.”

According to the report, Adelaide and Hobart were the only capital cities where the vacancy rate remained stable, with Canberra recording the largest fall, from 1.5 per cent down to 1.3 per cent.

Yet Canberra and Darwin have the highest vacancy rates of the capital cities, both at 1.3 per cent, while Adelaide and Perth have the tightest markets, with vacancy rates of 0.3 per cent.

Dr Powell said with numerous first-home buyer incentives available across the states and the prospects of the hotly discussed Help to Buy scheme, pressure on the rental market could ease in 2024.

“We’ve seen more first-home buyers entering the market,” she said.

“This trend will likely accelerate with the introduction of new incentives for first-time buyers, coupled with the possibility of interest rate cuts. 

“This could translate to reduced demand in the rental market and an increase in available rental properties for tenants.”

Sydney

Sydney’s vacancy rate fell to a new record low of 0.8 per cent, due to a record low level of supply. 

However, average views per rental listing declined over the month and annually, highlighting slower demand. 

Melbourne

Melbourne’s vacancy rate decreased back to a record low of 0.8 per cent, last seen in March 2023. 

This is the second consecutive month of a fall, the first time this has occurred in 12 months, supported by vacant rental stock falling to a record low. 

Despite this, views per rental listings have dropped both monthly and annually, suggesting rental demand is slowing. 

Brisbane

Brisbane has fallen for the second month in a row, the first time this has happened in 12 months, to 0.7 per cent. 

It is 0.1 percentage points off its record low, supported by the lowest level of vacant rentals in 10 months. 

However, there was a monthly and annual decline in average views per rental listing, suggesting rental demand is slowing. 

Perth

Perth’s vacancy rate is back at its lowest point on record, 0.3 per cent and is the most competitive city for tenants, along with Adelaide. 

This is the first monthly fall since August 2023 and it remains stubbornly tight, driven by a decrease in rental stock. 

Adelaide

Adelaide is the other most competitive city, steady at 0.3 per cent and 0.1 percentage points off its record low. 

A boost in rental supply is needed to see an improvement for tenants. 

Darwin

Darwin’s vacancy rate has declined to 1.3 per cent, falling for the second successive month – the first time this has happened since April 2023. 

A drop in rental stock drives this. 

However, its vacancy rate is the highest of the capitals, along with Canberra. 

Hobart

Hobart’s vacancy rate is steady at 0.7 per cent, influenced by a rise in rental supply. 

This is the lowest vacancy rate since February 2023, a significant shift away from its record high in June 2023. 

Canberra

Canberra’s vacancy rate decreased to 1.3 per cent, its lowest vacancy rate since November 2022. 

It is the largest monthly change of the capitals, but conditions remain less competitive for tenants relative to other capitals.