Va­cancy tight­ens

Port Douglas & Mossman Gazette - - FRONT PAGE -

VA­CANCY rates in the rental mar­ket re­main his­tor­i­cally tight but are start­ing to drift up­wards, ac­cord­ing to the Hous­ing In­dus­try As­so­ci­a­tion this week.

There has been con­sid­er­able vari­a­tion in the growth over the years with both the early 1990s and the early 2000s char­ac­terised by rather weak in­creases. From the mid-2000s, the pace of rental in­creases ac­cel­er­ated and reached an an­nu­alised level of nearly 9 per cent in late 2008.

The pace of growth sub­se­quently slowed but has re­mained well above its long term av­er­age over re­cent years.

Va­cancy rates came un­der par­tic­u­lar pres­sure through 2007, with an up­surge in rental in­fla­tion fol­low­ing. The com­ing of the GFC saw a loos­en­ing of ca­pac­ity in the rental mar­ket, but va­can­cies be­gan to tighten again in late 2009.

Lat­est data in­di­cate the num­ber of va­can­cies has been drift­ing up­wards, al­though va­cancy rates are largely steady.

From around 2000 to 2006, in­come grew at a con­sis­tently stronger rate than rental costs re­sult­ing in a size­able de­cline in the house­hold rental bur­den.

How­ever, the in­suf­fi­cient sup­ply of new hous­ing started to make an im­pact from 2007 on­wards. From this pe­riod on­wards, rental costs as a pro­por­tion of house­hold in­come have in­creased. Rel­a­tive to in­comes, rental costs are about 5 per cent cheaper to­day com­pared with two decades ago.

House prices have grown con­sid­er­ably faster than rents over the past two decades. How­ever, the long term de­cline in in­ter­est rates over this pe­riod means that this di­ver­gence is not un­war­ranted.

Eco­nomic growth will slow and fi­nanc­ing con­di­tions re­main re­stric­tive, says the HIA, while new hous­ing sup­ply will be of an in­suf­fi­cient mag­ni­tude to re­dress the short­age of dwellings.

‘‘Our anal­y­sis shows how move­ments in rental prices are strongly de­ter­mined by in­ter­est rate move­ments, mi­gra­tory trends and eco­nomic prospects. Over the next year, in­ter­est rates are likely to re­main largely steady,’’ the HIA says.

‘‘Net in­ward mi­gra­tion will re­main strong, though at lower lev­els than dur­ing the early part of the GFC. The con­di­tion of the rental mar­ket will rest on in­ter­est rate de­vel­op­ments, the eco­nomic out­look, mi­gra­tory trends, and the rate at which the re­cov­ery in new hous­ing sup­ply oc­curs.’’

On bal­ance, the HIA says, it ap­pears rental price growth will re­main rel­a­tively brisk for the fore­see­able fu­ture.

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