Australia’s rental vacancy rate hits an all-time low! Housing crisis set to worsen — Sydney auction clearance rate reaches 68%

Week’s Key Focus

The Daily Mail reports that Australia is facing an unprecedented housing crisis due to a massive influx of immigrants, leading to historically low rental vacancy rates. The latest data shows that PropTrack’s rental vacancy rate hit an all-time low in September 2023, with a national vacancy rate of just 1.06%, and all states are experiencing a tight rental market.

PropTrack points out that the tight rental market is primarily a result of rapid population growth. The continuous high-speed population increase, coupled with a diminishing supply of rental properties, is putting significant pressure on rental costs, especially in the capital cities. Official quarterly population data from the Australian Bureau of Statistics (ABS) reveals that as of March 2023, the net increase in overseas immigrants in Australia reached a staggering 454,300 people. This number is expected to continue growing in the 2022-2023 fiscal year, reaching around 500,000 net immigrants, surpassing the earlier prediction of 400,000 in the federal budget.

This massive immigration surge is occurring in a context of reduced residential construction. In the year leading up to March 2023, Australia built only 175,200 residential units, while the total population increased by 563,200. Analysis from the Australian News Corporation suggests that housing supply will not meet the demand unless Australia can rapidly increase housing availability to accommodate the high levels of immigration. To achieve the government’s goal of constructing 1.2 million housing units, the construction speed needs to be increased by nearly 40%.

To address this crisis, the national cabinet announced a plan in August 2023 to construct 1.2 million housing units within five years, starting from July 1, 2024. However, these housing units will not be built by federal, state, or territory governments; instead, they plan to achieve this by relaxing planning and zoning regulations, encouraging private developers to build these housing units.

As more people compete for rental properties, concerns are growing that Australia’s housing crisis will worsen, with an increasing risk of homelessness. According to data from the popular flat-sharing website Flatmates.com.au, the number of people seeking shared accommodation has nearly doubled. According to ABS estimates, the 2021 census identified 122,494 people as homeless, a 5.2% increase from 2016.

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Auction Results This Week

Sydney: 764 properties were listed for auction, with results reported for 495 properties. Out of these, 335 properties were sold, resulting in a clearance rate of 68%. The total value of properties sold at auction amounted to AUD 361,596,750, with a median property price of AUD 1,523,500.
Melbourne: There were 955 properties listed for auction, with results reported for 708 properties. Among these, 452 properties were successfully sold, resulting in a clearance rate of 64%. The total value of properties sold at auction reached AUD 332,914,000, with a median property price of AUD 1,000,000.