MELBOURNE’S vacancy rate has dropped to a near 10-year low, reflecting a “landlords’ market.” 

SQM Research figures show just 1.7 per cent of the properties being offered for rent in the city remained available in February, equating to 8693 residences.

This was down from 2 per cent in January.

SQM managing director Louis Christopher said the last time the figure slipped as low as 1.7 per cent was in June 2007.

This is quite remarkable — despite predictions of looming apartment oversupply in inner-city Melbourne, we are seeing vacancies fall rather than rise,” he said.

Melbourne’s rental market could “further tighten” as some apartment developments were scaled back, he said: “This would cut supply and could pressure rental growth higher in that city.

“At this point in time there’s not an oversupply of rentals. If anything, it’s turned into a landlord’s market.”

And its getting worse:

New data just released showed Melbourne's vacancy rate has just plunged further to a record new low in May at just 1.5%.

Perceptions of Melbourne apartment oversupply challenged by new data: UDIA chief executive

APARTMENT projects commencing in Melbourne fell by a third last year, according to new research that “challenges the perception of oversupply.”

Work started on 24,500 apartments in 2015 but dropped 33 per cent to 16,300 last year, Charter Keck Cramer data shows.

The number of apartments scheduled for completion in 2017 has also reduced considerably due to project delays, according to information released at the Urban Development Institute of Australia, Victoria, (UDIA) apartment research breakfast.

The research definitely challenges the perception of oversupply risk in Melbourne’s apartment market,” said UDIA chief executive Danni Addison.

Charter Keck Cramer national executive director Robert Papaleo said future apartment supply had already started to moderate in the city.

Throughout 2016 there were a range of house price cooling measures introduced by government regulators, and some enforced through the banking system, aimed at slowing demand from local and international investors,” he said.

These policy changes have also had an impact on the supply side of the market. With the resulting restrictions on finance availability to developers, future apartment supply has begun moderating.”

Want to buy a n old or resale property? New data shows huge demand for Victorian property with market set up for more price growth

RELENTLESS demand for Victorian real estate has pushed REA Group’s property demand index into record territory in February 2017.

Demand for homes on was up 25 per cent year-on-year last month amid tight stock levels which have been unable to quench buyers’ thirsts.

REA Group chief economist Nerida Conisbee said the Melbourne market looked to be primed for another strong year of price growth.

We saw a bit of a drop off in December in the demand index because of banks increasing rates but in January it surged back and then we saw this really strong result in February,” she said.

REA Group chief economist Nerida Conisbee said the Melbourne market looked to be primed for another strong year of price growth.

Part of it’s due to low listings, but the number of people looking to buy continues to accelerate and as a result it’s really setting us up for another strong year again in terms of price growth.”

Ms Conisbee said the impact of an interest rate rise would be minimal unless it was larger than about 0.75 per cent.

She added Melbourne was better placed than Sydney to deal with huge demand due to increased development in the city.

But Melbourne secondary sale buyers are finding it plenty tough amid strong competition at auction, said Industry Insider Property Advocates director Andrew Date.

Uneducated buyers will continue to miss out in a market place like this because the demand is well in excess of supply and that’s for all types of properties,” he said.

At auction it’s not unusual to see three, four or five people missing out … it’s very frustrating for buyers at the moment.”

Mr Date said if buyers did not lock in a property early this year they could be facing a much heftier price towards the end of 2017.

The supply is not going to increase to help the demand, so property prices will continue to rise this year,” he said.

If you’re looking to buy a property at the average median price right now you‘ll be paying an extra up to 10 per cent by the end of the year.”

"Falling vacancy rates generally increase pressure on household rents, which increases returns to investors,which leads to price rises"

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Source: Feb-May 2017