SQM's Vacancy rates now updated for November 08

[black dragon]

Cities as per below guys.

But also note you can look at individual postcodes.

Now I had to revise September and October. I found a glitch in those months when merging the REA and domain data. Basically when the program was de-duping it was taking out certain properties that shouldnt have been deleted. All fixed now..but it explains why we had a huge dip in September. The dip is still there..just isnt anywhere as large. October was slightly revised upwards. But November shouldnt be revised in future since the glitch has been fixed.

Apologies all for this stuff up.

And now to the numbers.

The trend is now very apparent..available rental properties are up in all cities from a year earlier.

Vacancies are still tight in the outer suburbs..but for Sydney and Melbourne its a free-for-all in the inner urban areas and CBD apartments.

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=nsw::Sydney&type=c&t=1 Sydney now at 4.2%

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=vic::Melbourne&type=c&t=1 Same for Melbourne.

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=qld::Brisbane&type=c&t=1 Brisbane slightly dipped to 1.9%

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=wa::Perth&type=c&t=1 Perth also dipped to 1.2%

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=sa::Adelaide&type=c&t=1 Adelaide rose to 1.4%

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=act::Canberra&type=c&t=1 Same for Canberra

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=tas::Hobart&type=c&t=1 Hobart dipped to 1.3%


Basically I consider anything below 2% as tight. So outside Sydney and Melbourne, I still believe its a landlord's market. But notice the trend. Many of these cities were recording vacancy rates below 1%. That is no longer the case.

Also guys please note the listing counts. Now over 20,000 for Sydney.

Thanks all. Feel free to scrutinise.

No intention of doing a wide media release on this. I will be waiting for December's numbers to come out..and then for that point onwards I will be hitting the big media button once a quarter.

Cheers.


www.sqmresearch.com.au

 

[sphinx]

Sydney CBD (2000) is now a whopping 7.9% ... a dramatic increase ... (might be much more if seasonally adjusted)
And considering Nov. is usually a dip followed by an increase in Dec. and Jan. , the data in the following two months may shoot through the roof.

I think the "fundamental demand/supply" theorists (be it population, lack of physical dwellings..blar blar) must have some new theories to explain away this again.

 

[Token Funder]

Nice work BD...certainly reflects some of the anecdotal info I've picked up in my travels around the place over the last few months, particularly inner Sydney.

In other news, bargain European sports cars are in Sydney, cheap yachts in Perth!

 

[Belu]

hold on, you are putting vacancy down as number of listings divided by dwellings yes? I don't see how this is a vacancy.

Lets look at this scenario:

A small town has only the following:
3 houses with 6 potential tenants
all 3 houses list at the same time and are occupied on day one of becomming available.
According to the calculation i think you are using, this makes the town have 100% vacancy rate for the 3 weeks they are listed?

My understanding was vancancy rate = unoccupied dwellings over total dwellings?

 

[black dragon]

No..I am not putting it down to just listings..Please read the methodology on the front page of the website. Sure it uses listings but it only includes a listing once it has been advertised for a period of time - being minimun two weeks.

 

[Belu]

i had a read of the methodology, i am confused if it is based on total of months rentals over total base or total of listings at end of month divided by base?

Also, how do you check if they are only up for less than 2 weeks if the process is completed monthly? sorry, am just curious

 

[BoatBoy]

cheap yachts in Perth!

How cheaps cheap?

40% off starting Q1 2008 cheap

Dave

 

[black dragon]

Dont be sorry

We are actually monitoring listings far more frequently than monthly, so we can track when a property is first advertised.

The end output is a snapshot on where the count stood at the end of the month. It is calulated with the turnover of listings during the course of the month. In other words, what has been withdrawn during the month, what is new, what is too new (14 days or less) and what is still existing.

You may say, what is the point of looking at withdrawals when they are gone. True..but it helps in our reconcilation purposes, especially from the current month to the previous month.

The denominator (base as you put it?) is actually based on total rental stock which is calculated from ABS census data and adjusted to present day.

So

Numerator = existing listings (existing = all listings advertised at the end of the month less those new listings added in past 14 days).

Divided into the denominator being:

Total rental stock.

 

[black dragon]

Perhaps taking you through an example might help.

Lets say we are calculating the vacancy rate for December.

There are four properties (A,B,C, D) we have advertised records for in december.

Three of them (A,B,C) were initially advertised in November while the fourth (D) is a new one first advertised in the first week of December.

Out of the three in November, A and B were first advertised in early November and A was still advertised at the end of December. B was no longer advertised around mid December. C was first advertised at the end of November and was still advertised at the end of December.

Meanwhile D was first advertised at the beginning of December, but come say the third week, was no longer advertised.

Here is how they would have been included in the count of existing listings:

(A) would have been included as part of the November reading and the December reading.

(B) would have been included in the count for November but not in December since it is no longer advertised.

(C) would have been included in the count for November and is still included in December since it was still advertised. IF however C was withdrawn from advertising within the first week of December then it would NOT have been included in EITHER month because of the 14 day rule and the fact it wasnt existing at the end of December.

(D) would NOT have been included in the count for either November or December.


C probably answers some of your questions..it (and other reasons) explains why we cant release the findings on the first day after the reference month.

 

[ILoveProperty]

Three of them (A,B,C) were initially advertised in November while the fourth (D) is a new one first advertised in the last week of December.

Did you mean first week here?

Thanks for the examples.

As you mention, the trend is the key. Looks like rents in Melb/Syd won't be going up as strongly as they have been in recent times?

Do you just look at the figures or do you have any anecdotal evidence on why vacancy rates are on the rise in these cities? People moving back home? More people per house? Migration slowing? It seems to have shot up fairly quickly.

Cheers

 

[black dragon]

Ahh thankyou..fixed that..

I thinks its been a combination of a few factors. Most recently the upper end of the market has really been recording dramatic increases in vacancies.

Take a look at nearly any affluent suburb/postcode and you will see what I mean. While the more affordable end of the market still seems to be tight, the upper end of the market is of course discretionary and I suspect that as the credit crisis has spread and deepened, more and more tenants in this bracket have opted to go for more conservative ($$ wise) properties.

Second, I think many landlords have priced themselves out of the market on the belief they could literlally get any rent they chose..only to find that the laws of supply and demand do exist in real estate and that if you lift your rents too high, expect little or no interest. And so it takes time for that realisation to materialise into a revised lower asking rental.

Third, I believe there has been an increase in supply in rental properties, particuarly over the past 12 months, simply due a dramatic increase in failed sales campaigns by property vendors and developers. This is particuarly the case in the Sydney CBD where Meriton dumped alot of development stock into the rental market this time last year.

And finally I think demand for rental accomodation over the past 12 months as softened. Rents have risen quite quickly and so demand has in turn responded. People are grouping together more to save on rent. Younger folks are staying with the folks longer, etc.

But in all this there is certainly still a shortage of rental accomodation at the affordable end of the market and further, in whole cities such as Canberra, Hobart, Adelaide and Perth.

But for Australia's two largest cities, I would strongly argue there is no shortage at the middle and upper end of the market. And IMO it is seriously wrong for the REI's in those two states to promote that there is.

 

[ILoveProperty]

Thanks for the response. Very much appreciated!

I guess it's not the first time that REI's have stretched things a bit, and it won't be the last

Yes, Perth, to a blinkered Melbourne person, seems to be holding up really well in terms of a tight vacancy rate. The story I hear is the the mines are shedding jobs so Perth "has been" effected. Not yet...

 

[Y33]

Any figures for Darwin? Darwin always seems to miss out on the stats but they reckon it won't be that long before Darwin's population is more than Hobart.

 

[Belu]

Thanks for walking me through it - i am an analyst by trade and you know how we are, judgemental until we understand it

So do you have the vacancy rate broken down by postcode? I would think that would be quite handy to have and look at! no hints intended

Good work

 

[ILoveProperty]

Belu
Yes, stats are broken up by postcode/suburb(town)

For example, go to any of the links above, at the very bottom of the page there is:
Click here to see vacancy rates by suburb / postcode.

The trends are interesting.

 

[Belu]

ahh nice my suburb of choice at the moment is at 2.1%. Was at 1% when i locked in my tenant which gave me a 7.3% yield...lol good timing!

 

[black dragon]

Any figures for Darwin? Darwin always seems to miss out on the stats but they reckon it won't be that long before Darwin's population is more than Hobart.

Hey I'm really sorry about that just a bad oversight on the post..but the good news is that we most certainly do have Darwin covered as per the link.

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=nt::Darwin&type=c&t=1

As mentioend here by the guys, you can also look up your postcode.

Darwin is still reasonably tight, but there seems to have been a large increase in supply since August. Looks like the centre of town is loosening up.

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?postcode=0800&t=1