Low Sydney vacancy rates highlight need for housing

Sydney-is-one-of-the-worlds-100-most-resilient-cities_157_91695_0_14101993_300The latest vacancy rates released by the Real Estate Institute of New South Wales (REINSW) show a steady rate of housing availability, despite drops in certain areas. Although the amount of rentals available is stable, the figure is still too low to start reining in the housing market.

Vacancy rates for November in inner Sydney fell by 0.1 per cent to 1.5 per cent and Sydney’s middle suburbs fell 0.2 per cent to 2 per cent. The only rise was in the outer suburbs, by 0.3 per cent to 1.7 per cent.

Although the net effect is a stable month, housing closer to the CBD is obviously now harder to come by, while residents in outlying areas have a bit more choice than they did before. However, these figures are still to low for the rental market and availability of housing to be considered at equilibrium.

“The current vacancy rates show that supply is not meeting demand as parity is generally recognised as being 2¬†per cent. Therefore we question the Australian Prudential Regulation Authority’s (APRA) concerns and recommendations for banks to tighten their lending criteria to investors,” said Malcolm Gunning, president of REINSW.

APRA announced on December 9 that it would be increasing supervision of authorised deposit-taking institutions (ADIs) to monitor how prudent their lending practices are. The regulatory body admits that most ADIs already operate within the bounds of the new restrictions they are putting place, but they will be monitoring the industry to find the ones that do not. Prudential supervision for those lenders may increase or other actions may be taken.

Given the low level of vacancies reported in Sydney, the nations centre of capital growth and home loan lending, it seems that APRA’s timing is a little bit off. Seeking to hem in investment in housing when the city is in need of more accommodation for residents is a move that could have negative effects on the market.

Leave a Reply

Your email address will not be published. Required fields are marked *