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Posted: 2017-03-09 16:41:54

There’s a lot of housing built in Australia right now, along with a lot of investor activity. Most is concentrated in Australia’s eastern capitals, particularly Sydney and Melbourne.

As a result, it’s hardly surprising to learn the number of properties advertised for rent hit the highest levels on record in the past 12 months.

“There were 362,708 houses advertised for rent and 287,233 units at a national level,” said Cameron Kusher, research analyst at CoreLogic. “The number of rental advertisements over the past year grew 8.7% higher for houses and 9.3% higher for units.”

The recent lift in rental advertisements is shown in the chart below from CoreLogic. The figures are presented as a rolling annual total, with those for houses and units both sitting at record highs.

And as shown in the following table, the council areas that have seen the largest increase in advertisements over the past 12 months have been in just two states — New South Wales and Western Australia.

It’s again courtesy of CoreLogic, and only shows those council regions that have recorded over 1,000 rental advertisements over the past 12 months.

While council areas in New South Wales and Western Australia dominated the list, Kusher says the factors driving the growth are polar opposites apart.

“Investor activity has been sluggish in Western Australia so this may indicate that as the economy has weakened and people have migrated away from the state. Perhaps home owners are looking to rent out their home rather than selling into weak market conditions,” he says.

It could also be reflective of the unwinding mining sector infrastructure boom, leaving previously tenanted properties empty as workers move on following the completion of projects.

However, for New South Wales, Kusher says the increase in properties advertised for rent is almost certainly reflective of increased investor activity.

“A number of New South Wales regions are also featured on the list and this is probably more reflective of the ramping-up of housing supply purchased by investors,” he says.

At the other end of the spectrum, those council areas that have seen the largest decline in advertisements over the past 12 months have been largely concentrated in regions surrounding Sydney and Melbourne, perhaps an indication that affordability constraints may be increasing demand in areas outside these cities.

Looking ahead, Kusher says the number of properties advertised for rent will likely continue to rise given the record number of dwellings under construction of which most are units who have been purchased by investors.

“For owners of investment properties and property managers, they should be mindful of their local rental conditions, and set their weekly rents accordingly to maximize their occupancy as well as income,” Kusher says.

“Landlords in areas where the supply of rental properties has shown a rise may find they need to hold their rents steady or provide a discount on their rental expectations in order to keep or attract tenants.”

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